A Form 5500 audit is an essential part of managing and maintaining a 401(k) plan. This audit helps verify that the plan is operating according to the terms of the plan document and that it meets requirements set by the Internal Revenue Service (IRS) and Department of Labor (DOL).

A plan audit is required only for larger plans that meet one of the following scenarios:

If your plan is required to undergo a Form 5500 audit, it must be completed by an independent public accounting firm, which you are responsible for hiring. The auditor will prepare a written report that must be attached to the Form 5500 filing. Failing to provide a completed audit report with the Form 5500 by the filing deadline may result in substantial penalties and other negative consequences.

This guide shares steps and helpful information to assist you through the audit process.

If you require a plan audit, you will need to engage a qualified independent public accounting firm before March 31 to ensure you can timely file your Form 5500. We recommend engaging as soon as possible so you are able to get on the auditor’s schedule.

You may engage with an auditor of your choosing. However, below are a few audit firms that other Guideline clients have used. These auditors are familiar with Guideline reports.*

It is important for your company to perform due diligence when choosing an audit firm. Critical considerations in selecting your auditor include, but are not limited to:

Failing to engage with an auditor will result in your Form 5500 not being filed. If a Form 5500 is not filed by the deadline, the company may be subject to substantial IRS and DOL penalties. ​

The DOL penalty for failure to timely file the Form 5500 is up to $2,670 per day for each day that the return is late, with no maximum. In addition, the IRS imposes a penalty of $250 per day for each day the return is late, up to a maximum of $150,000 per plan year. Please see the DOL andIRS websites for a description of potential penalties and programs available to fix late or delinquent filings.

​*The auditors listed are independent third parties and Guideline makes no representations as to the providers’ qualifications or suitability. In providing this list, Guideline is not acting in a fiduciary capacity or providing investment advice.

Once you engage with an auditor, you must provide us with the audit firm’s information by completing the Form 5500 audit task on your dashboard. The task will only take a few minutes and will ask you for the following information:

We rely on the information you provide in the Form 5500 Audit Task to provide your auditor access to the audit package and to report the audit firm’s information on Form 5500.

Once you complete the audit task, our team will grant your auditor access to the portal to retrieve the audit package. Please note that any requests for custom reports could result in additional fees.

Audit packages are typically available to auditors between March 31 and April 30. Please note your auditor will not be able to retrieve the audit packet until you complete the task on your dashboard. You will get weekly reminders until your audit task is complete.

During the audit process, Guideline will be in regular contact with your auditor. They will likely request information from you and from Guideline. We will respond to requests and questions as quickly as possible so the audit stays on track. We also recommend you respond as quickly as possible. A typical audit takes about 6-8 weeks to complete if the audit stays on track.

You may have other compliance-related tasks on your dashboard, such as a Company Info Task and a compensation collection task.It’s important that you complete these tasks timely. Your auditor will want to review your plan’s compliance testing, which will not be available until your compliance task(s) have been completed. Not completing these tasks could result in delays in your audit.​

You will need to sign the letter provided by your audit firm in order for the auditor to release the audit report.​
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Once your auditor has completed their work and the representation letter has been signed, they will prepare a report that includes financial statements and an auditor opinion. That report must be attached to the Form 5500 when it’s filed. Some auditors will provide us a copy of the audit report directly but some do not. Once your audit is complete, please be sure Guideline receives a copy so that we can attach it to the Form 5500. Please understand that until Guideline receives the auditor’s report, the Form 5500 can not be filed.

Guideline will send follow up emails requesting the final financials if we have not received them from your auditor as we approach the extended filing deadline (October 15). The Form 5500 cannot be filed without the audit report, and you will be responsible for the late filing penalty if not completed on time.

Because the number of participants with a balance in your plan is what dictates whether you’ll need an audit, you may wish to confirm that our records match the accurate number of participants.

If you’d like to receive a “Participant Count Report,” email filing@guideline.com. You can then let us know if you believe there are inconsistencies that should be corrected.

You are responsible for hiring a third-party auditor, having your payroll register and other documentation ready to share, and responding to inquiries from your auditor or Guideline as quickly as possible. Additionally, your auditor will want to review your annual compliance testing. Therefore, if you have compliance tasks on your Guideline dashboard, please be sure to handle those tasks timely.

Before the auditor issues the audit report (which must be attached to the Form 5500), the final step is to sign a representation letter from your auditor. If your audit is being completed close to the October 15 filing deadline, you must be available to sign that letter so the auditor can issue their report on time.

Your auditor will be able to provide you with an estimated cost, as the price depends on different factors, including business size and audit type. According to some sources, an annual audit cost can range from $8,000-$15,000.​

If your audit will not be completed before July 31, Guideline will automatically file a Form 5558 extension at no additional cost. This will extend your deadline to October 15.

Please be sure Guideline receives a copy of the audit report prepared by your auditor so we can attach it to the Form 5500 prior to filing with the Department of Labor.

If Guideline is the Plan's 3(16) Fiduciary, Guideline will file and sign the 5500. If Guideline is not the Plan's 3(16) Fiduciary (typically in the case of self-service plans), you’ll need to complete a signature task on your dashboard. Until the signature task is completed, your Form 5500 will not be filed.

Your plan may require a Form 8955-SSA or a Form 5330. If your plan requires either form according to our record, you will be notified. An explanation of each of these forms can be found below in the “Forms FAQ” below.

Guideline maintains an ERISA bond covering your plan, which provides protection in the event of a claim of lost plan assets due to fraudulent or dishonest acts by Guideline, our employees, or our agents. However, since the bond Guideline maintains does not cover any employees of your organization, you should consult your legal counsel to determine whether other individuals who may be managing your plan funds will need additional bonding. Learn more about insurance and ERISA bonding here.

Please forward a copy of the letter to filing@guideline.com so we can better assist you.

Form 5558 is used to apply for an extension to file the Form 5500 series (Form 5500, Form 5500-SF and/or Form 8955-SSA). Guideline will file Form 5558 automatically if it appears that we will not be able to file your Form 5500 by the initial deadline of July 31.

The Form 8955-SSA is a Social Security Administration form used to report employees who no longer work for your company but still have an account balance under your plan. The form is also used to report when terminated employees who were reported on a prior Form 8955-SSA have moved all of their money out of the plan.

Former employees that still have not moved money out of their account will be notified by the Social Security Administration based on Form 8955-SSA information once they apply for Social Security benefits. This is called a potential private benefit information notice.

Form 5330 is an IRS form used to report excise taxes owed related to employee benefit plans, including 401(k) plans. Guideline will prepare a Form 5330 on behalf of plan sponsors for the below scenarios if applicable:

For additional information on the different forms, please visit the DOL website.
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