Your employee benefit plan (EBP) is a vital part of your company. Benefits keep your staff happy and well-compensated for the jobs they do. Your EBP serves a dual purpose in that your company knows how much to budget for benefits every month.
As such, read why your organization needs an employee benefit plan audit from The Whitlock Co.
Companies Face a July 31 Deadline
Every year, July 31 is the deadline for sponsors of calendar-year employee benefit plans to file Form 5500, Annual Return/Report of Employee Benefit Plan, with the IRS and Department of Labor to fulfill ERISA requirements. Any business that sponsors a retirement savings plan must file a Form 5500 each year that the plan holds assets. Certain employer-sponsored health and welfare plans, including medical, dental, life insurance, and disability benefits, may also need to be reported on.
Employers may file an extension, after which they have until October 15 to file any of these forms. In general, large companies with 100 employees or more participating in the Company’s EBP file the full Form 5500, while smaller businesses can file Form 5500-SF (short form)
Why Are Employee Benefit Plan Audits Important?
The goal of an employee benefit plan audit is three-fold:
- Ensure the employer fulfills its fiduciary responsibility to the plan’s recipients
- Give insights into the employer’s internal control processes
- Report on possible weaknesses, operational errors, and potential fraud risks
Employers face fines for not filing Form 5500 and filing inaccurate reports. Employers can also face penalties and additional cost and funding into the EBP if the plan is not operating appropriately throughout the year. Therefore, it’s crucial you not only file these reports accurately but that the employer is also following the plan documents fully as they are written. An employee benefit plan audit can point out weaknesses in your potential filing and in how the plan is handled regularly.
Fiduciary Responsibility of Your Employee Benefit Plan
When you offer employee benefits, every organization must have a responsibility to employees to follow through with them. Otherwise, you could face lawsuits or penalties.
Choosing the Right Employee Benefit Plan Auditor for Your Company
The choice of your auditor is important. Your employee benefit plan auditor must be a licensed or certified accountant in your state, per Department of Labor regulations.
You should also choose an auditor that is:
- Independent (i.e. not tied to your company or the plan providers)
- Experienced in handling employee benefit audits
- Well-respected with references from previous work
The Whitlock Co. can help you with your annual employee benefit plan audits, providing you with the resources you need to file these forms accurately and on time.
Request a consultation with our firm today.
