When do you need an audit?

Knowing whether an audit is required for your benefit plan is a little like the story of Goldilocks – you need to figure out what number of participants is “just right.”

In general, an audit is required when an employer has a qualified benefit plan with more than 100 active participants at the beginning of the plan year.

Active participants include:

  • Eligible participants – those meeting eligibility requirements regardless of plan participation
  • Terminated and retired participants
  • Beneficiaries of deceased participants

Plans with more than 100 participants are usually considered large plans, while those with fewer than 100 are considered small plans. However, plans that fluctuate over and under 100 participants aren’t required to switch categories. This is called the 80-120 participant rule.

The categorization of “large” or “small” plan isn’t always set in stone. In fact, a plan sponsor has the ability to manage the number of plan participants. Certain plan provisions and hiring decisions can impact the categorization of the plan.

To learn more about aspects to consider when categorizing the size of your benefit plan, download our Buyer’s Guide.


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