The Essentials of Employee Benefit Plan (EBP) Audits
Posted on June 24, 2025
What Is an Employee Benefit Plan Audit and Why Does Your Plan Need One?
Employee Benefit Plan (EBP) audits are vital for providing assurance to plan sponsors and participants about the correctness and honesty of their plans’ financial disclosures. An EBP audit involves an independent auditor assessing the plan’s financial accounts and the in-house controls put in place for effective management of participant accounts and plan transactions. The auditor also verifies compliance with the Employee Retirement Income Security Act of 1974 (ERISA). At the audit’s conclusion, the auditor delivers a verdict on the fairness of the plan’s financial accounts, providing assurance that participants’ benefits are satisfactorily safeguarded.
EBP audits are relevant to both defined contribution plans (like 401(k) and 403(b) plans) and defined benefit plans. They are a key element of ERISA compliance, as the Department of Labor (DOL) mandates prompt submissions of Form 5500 along with audited financial accounts for larger plans. The audit requirement also extends to health and welfare plans if certain thresholds are reached.
A. What is an EBP Audit?
An EBP audit is essentially a review of a plan’s financial transactions and operations to ensure the accuracy of its financial accounts. This entails examining essential documents—such as plan guidelines and amendments, participant eligibility records, and benefit distributions—while also verifying that the plan is in line with its provisions and relevant laws. A comprehensive EBP audit can pinpoint strengths in the plan’s processes and raise alerts about any issues or deficiencies that need rectification.
B. Who Needs an EBP Audit?
Typically, a plan that has 100 or more eligible participants is required to undergo an annual audit. Eligible participants encompass employees who have enrolled, separated or retired employees who still hold assets in the plan, and beneficiaries of deceased employees receiving benefits.
These eligibility counts have complexities, so plan sponsors must carefully monitor participation levels to ascertain if they require an audit. Recent regulatory changes have clarified that a plan with at least 100 participants holding account balances likely meets the threshold for a mandatory audit. Even if the participant count temporarily falls below 100, a plan may opt to undergo an audit to maintain consistency and good governance practices.
C. Why Are EBP Audits Required?
EBP audits are not merely about meeting a regulatory requirement. They help ensure the plan is managed responsibly and that participant interests are protected. In-depth plan auditing can lessen the risk of mistakes in retirement and health benefit distributions, evaluate the plan’s internal controls, and discover non-compliance before it results in severe penalties. A correct and timely audit also aids in filing Form 5500, which the DOL expects from plan sponsors annually. Violations and filing delays can result in hefty fines and business disruptions, making compliance a crucial priority.
How Topel Forman Can Help
Topel Forman’s Audit Services team has a deep background in working with plan sponsors to ensure that EBP audits meet every requirement—from accurate financial statement reporting to timely Form 5500 filings. Our experienced professionals focus on delivering practical, cost-effective resolutions for any issues that arise. We are well-versed in ERISA provisions, DOL regulations, and the latest auditing standards, which helps us provide high-quality attestation services and offer proactive advice throughout the engagement. Topel Forman is an active member of the EBPAQC.
By collaborating with our dedicated assurance experts, you can reduce stress during the audit, improve internal controls, and ultimately strengthen your employee benefit plan’s compliance posture. Whether you are dealing with a first-time audit or looking to update your existing process, our team tailors our approach to fit your specific plan and objectives.
Expert Contributors
John Rozek, Member/Partner
John leads Topel Forman’s assurance practice and has over 25 years of experience advising closely held companies. He performs and oversees audits, tax reviews, and special projects for employee benefit plans.
Jason Glickley, Member/Partner
Jason leads Topel Forman’s employee benefit plan practice and has over 18 years of experience working with most plan sponsors, TPAs, and payroll providers.
