Does My 401(k) Plan Need an Audit?
Last updated · Source data: plan year 2024 Form 5500 filings
When is a 401(k) plan required to have an audit?
Generally, when it has 100 or more participants with account balances at the beginning of the plan year. That makes it a “large plan” under ERISA, and its Form 5500 must include an independent CPA’s audit report. The 80–120 rule lets plans near the line keep their prior filing status.
The 100-participant rule, precisely
ERISA requires plans that file as large plans to engage an independent qualified public accountant (IQPA) and attach the audit report to the annual Form 5500. Large-plan status turns on the participant count on the first day of the plan year. Two details matter:
- Who counts changed in 2023. For plan years beginning on or after January 1, 2023, defined contribution plans count only participants with account balances at the beginning of the year (plus, in practice, deceased participants’ beneficiaries entitled to benefits are tracked separately on the form). Eligible employees who never contributed no longer count — a change that relieved thousands of plans of the audit requirement.
- The count is beginning-of-year. Growth during the year does not trigger an audit mid-year; the test resets each January 1 (or fiscal year start).
The 80–120 rule: what to file this year
| Participants with balances (start of year) | Filed as last year | This year’s status | Audit required? |
|---|---|---|---|
| Fewer than 80 | Any | Small plan | No* |
| 80–99 | Small plan (or first filing) | Small plan | No* |
| 80–99 | Large plan | May elect to remain large | Yes, if remaining large |
| 100–120 | Small plan | May elect to remain small (80–120 rule) | No, if election made* |
| 100 or more | Large plan (or first filing) | Large plan | Yes |
| 121 or more | Any | Large plan | Yes |
*Small pension plans avoid the audit through the small plan audit waiver, which generally requires that at least 95% of plan assets be “qualifying” assets (or that a fidelity bond cover the non-qualifying portion) and that certain disclosures be made. Most recordkept 401(k) plans satisfy it.
The practical takeaway: a growing plan that filed as small can defer its first audit until the plan year that begins with 121 or more participants with balances — but once it crosses, it should engage an auditor early, not at the filing deadline.
Apply these rules to your plan with the checker below, which also computes your Form 5500 and Form 5558 dates.
Deadlines: Form 5500 and Form 5558
| Milestone | Rule | Calendar-year plan |
|---|---|---|
| Form 5500 (with audit report attached) | Last day of the 7th month after plan year end | July 31 |
| Extension via Form 5558 | File before the normal due date; extends 2½ months | October 15 |
| Automatic extension with sponsor’s tax return | If plan year = sponsor tax year and the corporate return is extended | Corporate extended due date |
The audit is not a separate filing — it is an attachment the Form 5500 is incomplete without. Auditors’ calendars fill by late spring; sponsors who first call in September for an October 15 deadline pay rush premiums or miss the date.
Does your plan need an audit this year? Check in 30 seconds
Applies the current counting rule — participants with account balances on the first day of the plan year — the 80–120 rule, and the Form 5500 calendar for your plan year end.
Result
Your choice: the 80–120 rule applies
Filing status: Small plan by election, otherwise large plan
- 100 participants with balances is at or above 100, but because the plan filed as a small plan last year it may elect to file as a small plan again — no audit — until a plan year begins with 121 or more.
- Without that election the plan files as a large plan and needs an audit. Growing plans often engage an auditor a year early rather than under deadline pressure.
- Small plans skip the audit through the small plan audit waiver: generally at least 95% of plan assets must be qualifying assets (or a fidelity bond must cover the rest) and certain disclosures must be made. Most recordkept 401(k) plans satisfy it.
| Milestone | Rule | Date |
|---|---|---|
| Participant count date | First day of the plan year | January 1, 2025 |
| Form 5500 due (with the audit report attached) | Last day of the 7th month after the plan year ends | July 31, 2026 |
| Extended due date (Form 5558) | File Form 5558 by the normal due date; extends 2½ months | October 15, 2026 |
Assumes a 12-month plan year; a plan year of seven months or fewer may elect to defer its audit to the following year’s filing. If the plan year matches the sponsor’s tax year, an extended corporate return also extends Form 5500. Plain-language summary of the Form 5500 instructions, not legal advice — confirm with your ERISA counsel or auditor.
What the audit actually covers
An employee benefit plan audit tests the plan’s financial statements and, in practice, its operations: whether contributions were calculated on the plan’s definition of compensation, deposited timely, and allocated correctly; whether distributions and loans followed the document; and whether participant data supports the account balances. Where a qualified institution certifies investments, the sponsor can elect an ERISA Section 103(a)(3)(C) audit (formerly “limited scope”), which narrows investment testing and lowers cost — see the cost guide.
Common questions
Do employees without 401(k) balances count toward the audit threshold?
No. For plan years beginning on or after January 1, 2023, defined contribution plans count only participants with account balances at the beginning of the plan year. Eligible employees who never enrolled and hold no balance no longer push a plan toward the audit requirement.
What is the 80–120 participant rule?
A plan with between 80 and 120 participants (with account balances, for 401(k)-type plans) at the beginning of the plan year may elect to file Form 5500 in the same category — large or small — as it filed the prior year. A plan that filed as a small plan can therefore keep filing as small, with no audit, until it begins a year with 121 or more.
When is the audit due?
The audit report attaches to Form 5500, which is due the last day of the seventh month after the plan year ends — July 31 for calendar-year plans. Filing Form 5558 before that date extends the deadline two and a half months, to October 15 for calendar-year plans.
What happens if I file Form 5500 without a required audit?
The Department of Labor can reject the filing as incomplete. An unfiled or rejected Form 5500 exposes the sponsor to civil penalties that adjust annually for inflation — $2,739 per day for 2025, with no maximum. The Delinquent Filer Voluntary Compliance Program caps penalties for sponsors who correct before the DOL notices.
Can a new or short plan year defer the audit?
A plan year of seven months or fewer may defer its audit: the sponsor elects on Form 5500 to have the short year audited together with the following plan year, attaching one audit covering both periods to the second filing. A new plan starting the year with 100 or more participants with balances files as a large plan and is audited normally.
Is an ERISA Section 103(a)(3)(C) audit still a real audit?
Yes. Formerly called a limited-scope audit, it is an election available when a bank, trust company, or insurance carrier certifies the plan’s investment information. The auditor relies on that certification for investment amounts but still audits contributions, distributions, participant data, and compliance, and issues a report under AICPA SAS 136.
This page summarizes ERISA and Form 5500 instructions in plain language for research purposes; confirm specifics with your ERISA counsel or auditor.