Here are some of the most common items that lead to a Department of Labor (DOL) and IRS audit of employer plans including ROBS 401k plans (Business Financing 401k plans):
Complaints by employees. They may submit a complaint to the government over disputes regrading items such as distributions, contributions and participant loans.
Form 5500. This form is used for multiple purposes by the government including as an audit tool in addition to census use. The government will review the current one and compare it to the ones filed in previous years to see if big changes occurred. For example, if last year’s ending balance does not match this year’s beginning balance or if the number of assets in the plan is incorrect.
Preparing for a Possible Inquiry by the Government
Common sense applies here. For example, when processing distributions, confirm that participant qualifies for the distribution and that proper documentation is reporting is performed. Form a plan document side, make sure plan amendments documents are timely and properly executed. The auditor will also requests for documents related to plan governance, fiduciary obligations and plan administration.
