What Are the Most Common Errors Found in Plan Audits?
A recent conversation between Trucker Huss’ Callan Carter and Diane Wasser of the CPA firm EisnerAmber LLC spotlights errors commonly found in a retirement plan audit.
An auditor tests a sample of an employer’s employee population when reviewing a plan. Wasser says, and once he or she discovers an error they must determine how to respond — which can include testing a larger sample or seeking additional information.
Some errors are more widespread than others, Wasser says. These include:
- using incorrect compensation in calculating employer and employee contributions;
- improperly applying eligibility provisions; and
- improperly conducting nondiscrimination testing.
There are ways to head off errors, says Wasser. Among them:
- have a highly qualified plan auditor, a knowledgeable plan recordkeeper and an ERISA counsel;
- take the fiduciary role seriously;
- review the plan before the review process starts;
- actively read the plan document and amendments;
- compare the plan document and amendments to the way the plan is run; and
- consult with qualified professionals to correct any errors discovered as soon as possible.