401(k) Audit Extension Deadline Is October 15

For companies with 100 or more account balances, an independent audit is required annually—and it must be submitted alongside your Form 5500. The 2½-month extension buys you extra time beyond the July 31 deadline, but once October 15 hits, there’s no wiggle room left.

The Department of Labor (DOL) and IRS use Form 5500 and its accompanying audit to assess the health and compliance of your organization’s 401(k) plan. The audit isn’t just a formality—it confirms whether your plan is being operated in accordance with ERISA regulations and your plan document. It’s a critical checkpoint—and an area of growing scrutiny.

In fact, in November 2023, the DOL’s Employee Benefits Security Administration (EBSA) released its latest Audit Quality Study, which reviewed 307 plan audits from the 2020 filing year (prior to the implementation of SAS 136). While the study showed a modest improvement in quality—30% of audits had significant deficiencies, down from 39% in 2015—it still revealed that nearly one in three audits failed to meet professional standards.

So, what does that mean for your business?

The DOL holds plan sponsors accountable for selecting a qualified, experienced auditor. Submitting a low-quality audit can:

• Trigger a DOL or IRS investigation.
  
• Result in the rejection of your Form 5500.
  
• Create significant administrative and reputational fallout.
  

And with SAS 136 now entirely in effect, expectations have increased. The standard raises the bar for how benefit plan audits are planned, conducted, and reported—meaning organizations can no longer afford to treat this as a last-minute compliance exercise.

If you’re still finalizing your audit before the October 15 extension deadline, it’s critical to work with an audit team that specializes in employee benefit plans and understands the regulatory landscape. 

Failure to file Form 5500 on time—with or without the required audit—can trigger steep penalties:

• IRS: $250 per day, up to $150,000.
  
• DOL: Up to $2,586 per day with no maximum.
  

These aren’t just technical fines. They can raise red flags that lead to deeper investigations or risk plan disqualification, which has significant consequences for both employers and participants.

Frequent trouble spots include:

• Assuming your third-party administrator (TPA) handles everything.
  
• Waiting too long to engage an audit firm.
  
• Incomplete or inconsistent payroll and eligibility records.
  
• Lack of internal understanding about plan operations.

Too often, benefit audits feel like just another box to check. But when leaders take a closer look, these audits can reveal helpful insights, like how well internal processes are working or how supported employees feel when it comes to retirement planning.

For example, delays in remitting employee contributions—something auditors closely scrutinize—can be a red flag not only for regulators but also for inefficiencies in your payroll process. Similarly, trends in employee participation or match levels can spark bigger conversations about workforce engagement and retention.

Viewed through the right lens, the 401(k) audit is more than a requirement—it’s a business health checkpoint.

1. Confirm your participant count based on account balances—not just contributions.
   
2. Connect with your auditor if you haven’t already done so.
   
3. Organize your plan documents, payroll records, and census data to avoid last-minute delays.
4. Review the prior year’s audit findings (if applicable) and proactively address any lingering issues.

If you haven’t finalized your audit—or aren’t sure whether you need one—there’s still time to act, but the window is closing. At Froehling Anderson, we make the process efficient, accurate, and tailored to your team’s reality.

Reach out now to get your plan over the finish line before October 15—and turn this requirement into a moment of clarity for your business.