Not all audits mean that something went wrong. The IRS just wants to keep tabs on everyone, simple as that. Some occurrences just so happen to trigger an audit, and there’s a possibility that you might be next. Find out what causes a 401(K) to be audited so you can know what to expect and how to be prepared. Need help managing your retirement savings accounts? Call your trusted income planners at Maggi Tax Tampa to schedule a consultation today!
How Company Retirement Plans Trigger the Annual Audit:
If you have a 401(K), you’re most likely working under an employer at a large company in Tampa. Any company that has a big enough number of employees eligible for employer-offered retirement savings accounts is sure to catch the attention of the IRS. Knowing when this might happen can keep you on your toes and avoid unwanted surprises.
A company often triggers an audit when the number of employees eligible for a 401(K) plan reaches 100 individuals on the first day of the year. Employers are responsible for finding a third-party auditor to conduct the inspection and report to the IRS.
Which Employees Qualify For the Audit?
Sometimes, the number of employees that are counted in the audit isn’t limited to the ones who currently have active accounts. The “100-employee” requirement counts all eligible participants in Tampa whether they actually have a 401(K) or not. This may also include retired employees who still have assets under management in their retirement savings accounts.
Dates You Need to Know
January 31st – Employers must submit a census to a third-party administrator.
March 15th – Employers will know if they require an audit.
July 31st – Employers must complete the audit and file Form 5500.
Your Introduction to Form 5500
When filing Form 5500 in Tampa, employers must submit the proper version depending on their eligible employee count. These versions are separated by large plans and small plans. If you’re not sure which version of Form 5500 you need to file, just reach out to trusted investment planners near you!
Are There Exceptions to the Yearly 401K Audit?
The rules surrounding the yearly audit can be a bit finicky depending on the situation. Here are a couple of exceptions to the rule to help you decide whether or not you need a 401(K) audit:
1. Partial Plan Years
Companies in Tampa that are on a partial plan year lasting seven months or less can delay their 401(K) audit to the following tax year. Even if your eligible employee count dips below 100 in that time, you will still need an audit covering the partial plan year.
2. The 80-120 Rule
As long as your eligible employee count stays within the 80-120 range, the need for an audit will stay the same as the previous tax year. For example, if you didn’t need an audit last year but reached over 100 (but under 120) eligible employees this year, you still won’t require an audit.
Learn more new rules for 401(K)s and more in our 2025 retirement rule update to practice proper risk management in Tampa.
Be Prepared With Comprehensive Financial Planning at Maggi Tax Tampa!
Learn how to handle your 401k like a pro by leaving it to the professionals! Call your reputable tax planners at Maggi Tax Tampa at (727) 799-1701 for investment planning services near you.
Scheduling