When and Why Retirement Plans Need a Financial Statement Audit
Starting with the 2023 Form 5500 changes, a plan is generally treated as a ‘large plan’ and requires an annual financial statement audit if it has **100 or more participants with account balances at the beginning of the plan year**. Former employees with a $0 balance are not counted for this threshold. The **80–120 participant rule** still applies, but it uses the same ‘withaccountbalance’ methodology when determining whether a plan may continue filing in the same category as the prior year.
Who Needs an Audit?
Starting with the 2023 Form 5500 changes, a plan is generally treated as a ‘large plan’ and requires an annual financial statement audit if it has **100 or more participants with account balances at the beginning of the plan year**. Former employees with a $0 balance are not counted for this threshold. The **80–120 participant rule** still applies, but it uses the same ‘withaccountbalance’ methodology when determining whether a plan may continue filing in the same category as the prior year.
Audit Scope
Participant data and eligibility testing
Contributions, distributions, loans, and investments
Internal controls and timeliness of deposits
How to Prepare
Maintain reconciled payroll and trust reports, document controls, and address any prior auditor findings early.
Plan Sponsor Action Checklist
Talk to our team
References
- DOL Form 5500 Instructions (80–120 participant rule).