Frequently Asked Questions

The method of counting participants varies depending on the type of employee benefit plan:

• For defined contribution plans, for plan years beginning on or after January 1, 2023, individuals are counted as participants if they have account balances at the beginning of the plan year, except for new plans, which use the number of participants with account balances at the end of the plan year.
• For defined benefit plans, individuals are counted as participants if they are eligible to participate (for example, when they satisfy the plan’s age and service requirements) in the plan at the beginning of the plan year.
• For welfare plans, individuals are counted as participants if they are eligible to receive a benefit at the beginning of the plan year.

The 80-120 participant rule provides an exception to the general audit requirement for employee benefit plans. If a plan has between 80 and 120 participants at the beginning of the plan year, it can file its Form 5500 in the same category as the prior year filing, regardless of whether it’s a large or small plan. This means a plan can continue to file as a small plan, even if it crosses the 100-participant threshold. If a plan had fewer than 100 participants and filed as a small plan last year, and it now has 80-120 participants this year, it can still file as a small plan, avoiding the audit requirement. Once a plan has 121 participants or more, it must file as a large plan and will require an audit until it falls below 100 participants with account balances as of the beginning of the plan year.

If the plan year is seven months or less, the audit for the short plan year may be deferred until the following plan year. This means the plan audit for the short plan year still needs to be performed; however, the audit report is filed with the following year’s Form 5500. This deferral does not mean the audit requirement is eliminated. Filing of the short plan year’s Form 5500 is not deferred.

An employee benefit plan audit is an independent examination of your company’s retirement or welfare benefit plan, required by the Department of Labor (DOL) to ensure compliance with the Employee Retirement Income Security Act of 1974 (ERISA). Auditors must follow auditing standards generally accepted in the United States of America (GAAS)to determine whether the plan’s financial statements and the notes thereto are fairly presented in conformity with accounting principles generally accepted in the United States (GAAP). In addition, the notes to the financial statements must include all disclosures required by laws and regulations applicable to the plan, including the DOL’s Rules and Regulations for Reporting and Disclosure under ERISA. These audits also help to ensure that plan fiduciaries meet their responsibilities. Torrillo & Associates specializes in audits of ERISA-plan financial statements that verify the financial integrity of the plan and ensure compliance with applicable regulations. An employee benefit plan audit focuses on areas like benefit payments, contributions, investments and participant data.

The cost of a 401(k) audit varies depending on the plan’s complexity and size. Torrillo & Associates’ unique qualifications enable us to offer the personalized service and high quality that you expect at rates that are reasonable and fair. Torrillo & Associates provides affordable, fixed-fee pricing for most audits, helping you budget more effectively while ensuring audit quality. Please feel free to contact us for a quick quote tailored to your plan.

For an employee benefit plan audit, you will typically need the plan document and amendments, Form 5500 filings, agreements, and contracts with service providers, census or participant data, trust statements, recordkeeping reports, payroll records, service organization control reports (SOC 1®), IRS opinion or determination letters, fidelity bonds and internal controls documentation. Torrillo & Associates provides a full checklist and assists you in gathering and organizing the required documents.

Yes. While we always enjoy meeting with our clients in person, we can also perform efficient, fully remote benefit plan audits using secure file-sharing and communication systems. This allows minimal disruption to your daily operations while ensuring full compliance with audit requirements. However, even when we perform our work remotely, typically we still ‘meet’ with clients through the video conferencing method of their choice for status updates and certain required interviews and procedures.

Failure to complete and submit a required audit with Form 5500 can result in substantial DOL penalties. Torrillo & Associates helps you to avoid compliance issues resulting from late filing or not filing. The DOL sponsors the Delinquent Filer Voluntary Compliance Program (DFVCP) that provides plan administrators with the opportunity to pay reduced civil penalties if they file under the DFVCP. We have worked with many clients who needed audits for prior years in order to become current and file under DFVCP.

Form 5500, along with the audited plan financial statements (if required), is due the last day of the seventh month after the plan year ends. An automatic 2.5-month extension is available by filing Form 5558 with the Internal Revenue Service, which most third-party administrators do automatically. For a calendar year (December 31st year-end) employee benefit plan, the filing deadline would be July 31st without an extension and October 15th with an extension. Torrillo & Associates helps our clients ensure a timely filing by completing audits on time as well as reminding clients of important dates and deadlines.

Under an ERISA Section 103(a)(3)(C) audit, the plan administrator instructs the plan auditor not to perform any auditing procedures on investment assets and related transactions that are certified as complete and accurate by a qualified institution. All other audit procedures, including procedures on contributions, participant data, payroll, distributions, and expenses are performed. More specifically, the Employee Retirement Income Security Act of 1974 (“ERISA”), Title I, Section 103(a)(3)(C), and Regulation 2520.103-8 of the Department of Labor’s (“DOL”) Rules and Regulations for Reporting and Disclosure under ERISA allow plan administrators to request an ERISA Section 103(a)(3)(C) audit of plans with assets held by a bank, trust, similar financial institution, or insurance company that is regulated and supervised and subject to periodic examination by a state or federal agency.

In 2020, approximately 83% of plans obtained ERISA Section 103(a)(3)(C) audits (formerly, limited-scope audits), per the U.S. Department of Labor, Employee Benefits Security Administration, Office of the Chief Accountant, Audit Quality Study, November 2023 (“Audit Quality Study”).

Torrillo & Associates can assist you with assessing your plan’s eligibility for an ERISA Section 103(a)(3)(C) audit.

No. First, plan management must determine if the plan is eligible to elect an ERISA Section 103(a)(3)(C) audit. Plans that are eligible for an ERISA Section 103(a)(3)(C) audit are employee benefit plans that have assets held for investment (investment information) by a bank or similar institution or insurance carrier that is regulated, supervised, and subject to periodic examination by a state or federal agency (qualified institution). In addition, plan management is required to obtain statements or information regarding assets so held that are prepared and certified by the qualified institution in accordance with 29 CFR 2520.103-5 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA that the investment information is complete and accurate.

Torrillo & Associates audits a wide range of employee benefit plans, including certain health and welfare plans, pension plans, 403(b) plans and profit-sharing plans. We would be happy to discuss your health and welfare plan or other ERISA plan with you to determine if we can be of service.

Medical, dental, short-term and long-term disability and other types of health & welfare benefit plans only require an audit if funded through a trust often referred to as a Voluntary Employees’ Beneficiary Association (VEBA) trust. If a welfare plan is funded, it must be audited, and the audit report must be included in the Form 5500 filing.

Often, benefits from these plans are paid out of the general assets of the employer/plan sponsor, or through insurance rather than a trust. According to the Form 5500 instructions, fully insured, unfunded, or a combination of unfunded and insured welfare plans – as well as fully insured pension plans that meet the requirements of 29 CFR 2520.104-44 – are exempt from completing the Schedule H, and therefore are also exempt from the audit requirement.

Torrillo & Associates has decades of experience conducting audits of ERISA plans for plan sponsors of all sizes throughout Pennsylvania, New Jersey, Delaware, New York, Florida, and beyond. Established in 2004, the firm’s leadership has over 30 years of experience in auditing employee benefit plans. Our CPAs are employee benefit plan audit specialists, not generalists. Even our new associates typically work on over 30 benefit plan audits per year which helps them to quickly gain experience.

We provide employee benefit plan audit services to plan sponsors across the U.S. including Pennsylvania, New Jersey, and Delaware. Located in Glen Mills, PA, we are a trusted regional CPA firm for employee benefit plans.

We are currently licensed in the following states: Pennsylvania, New Jersey, Delaware, New York, California, Connecticut, Florida, North Carolina, Missouri, Georgia, and Minnesota. In addition, a majority of states have adopted mobility legislation which is a practice privilege that generally permits a licensed CPA in good standing from a substantially equivalent state to practice outside of the CPA’s principal place of business without obtaining another license. Accordingly, additional states in which we currently have clients include but are not limited to, Maryland, Virginia, Texas and Colorado.

Start by organizing plan documents, amendments, and correspondence. Also gather employee eligibility records, payroll data and plan reports. Torrillo & Associates walks you through every step with a clear checklist to ensure that you are fully prepared.

Yes. All our employee benefit plan audits follow AICPA standards and meet the requirements of the Department of Labor and the IRS. Our team ensures that your audit withstands regulatory scrutiny and gives you peace of mind.

Errors and other compliance related matters such as eligibility mistakes or late contributions are often discovered during an audit. While we do not provide ERISA legal advice, our extensive experience with DOL and IRS correction programs enables Torrillo & Associates to help you understand, address, and correct errors. This includes collaborating with the Plan sponsor and ERISA counsel when preparing submissions to the DOL or IRS.

Yes, but you should ensure that they specialize in employee benefit plan audits. The Department of Labor (DOL), in its November 2023 Audit Quality Study, found that 30% of employee benefit plan audits did not meet auditing standards. If an audit does not meet standards, the DOL can reject the Plan sponsor’s Form 5500 leading to fines and penalties. Asking for a firm’s most recent peer review report is one way to see if there are any quality concerns.

All firms that are members of the Employee Benefit Plan Audit Quality Center must post their most recent peer review report to the AICPA Peer Review Web Program for public searches. Lastly, while some firms offer both audit and tax services, it’s essential to avoid conflicts of interest. Torrillo & Associates is independent and focused solely on benefit plan audits to ensure objectivity and full compliance with independence standards.

We offer a dedicated employee benefit plan audit team, digital tools for document sharing, and proactive communication. Our streamlined process reduces stress, ensures accuracy, and keeps your company on track with Form 5500 and audit deadlines. We know that employee benefit plan audits can be complicated for Plan sponsors as they are performed only once a year and there are many “players” involved, including accounting, human resources, payroll, recordkeepers, custodians, trustees and Form 5500 preparers. We “quarterback” the audit, by using our experience and expertise to coordinate the audit and proactively lead your team through it.

Yes. If you’re unsatisfied with your current provider or looking for a more responsive partner, Torrillo & Associates ensures a smooth transition, including coordination with your previous auditor and plan administrator.

The Employee Benefit Plan Audit Quality Center (EBPAQC) is a voluntary membership organization of the American Institute of Certified Public Accountants (AICPA) for firms that perform ERISA employee benefit plan audits and was established to promote the quality of employee benefit plan audits. Firms within the EBPAQC demonstrate a commitment to employee benefit audit quality by agreeing to robust membership requirements. Torrillo & Associates, LLC has been a member of the AICPA EBPAQC since its inception over 20 years ago.

We DO NOT outsource or offshore work. All of our audit work is done here in the United States of America (U.S.A.). While we are seeing other CPA firms of all sizes offshore due to being able to pay workers significantly less than U.S.-based employees, we find that despite this cost advantage, our prices are still very competitive. Clients also seem to value the level of service and attention that we can provide. We believe that outsourcing or offshoring to a third party could negatively impact service and quality.

While there are certain instances where we may be required to share our audit workpapers with the DOL, Torrillo & Associates generally does not share confidential employee information with third parties. With the sensitive information that is involved in a benefit plan audit, including personally identifiable information (PII), we believe utilizing our own employees based in the U.S.A. is beneficial to our clients and plan participants. In addition, we only use secure methods to send and receive information for the audit. If clients or their service providers do not have a preferred secure file-sharing system, we utilize a secure mail system to ensure such information is secure.

As specialists in employee benefit plan audits, we understand the complex regulatory landscape and unique reporting requirements these plans entail. Our audit approach is risk-based, efficient, and designed to meet the highest standards of quality while minimizing disruption to your internal teams. By focusing our practice on employee benefit plan audits, our experience and expertise are not just with the partner or the manager, but with our full team. Our personnel will help coordinate the audits and proactively lead your team through it. As specialists, our extensive experience and expertise enable us to quickly help you resolve any complex issues that may arise.

We are employee benefit plan audit specialists. We have a proven track record of providing responsive service. Our knowledge allows us to focus on compliance with DOL and IRS regulations which in turn allows you to perform your fiduciary duties of protecting plan participants. Our depth of experience leads to audit efficiency and value. We are dedicated to audit quality and are recognized experts in employee benefit plan audits.