401(k) Audit Requirements: When Your Plan Needs an Independent Audit
Large employee benefit plans must attach an independent auditor's report to their Form 5500. Whether a given 401(k) crosses that line comes down to a participant count — and a 2023 rule change moved the line for thousands of plans. Here's exactly when an audit is required and when it isn't.
Last updated June 9, 2026
When does a 401(k) need an audit?
A retirement plan generally needs an independent audit when it's a large plan — broadly 100 or more participants at the beginning of the plan year. A large plan files the full Form 5500 with Schedule H (detailed financials) and must attach a report from an Independent Qualified Public Accountant (IQPA). Eligible small plans (under 100) file the short Form 5500-SF and are usually exempt from the audit. The same threshold drives the large-plan vs. small-plan question on who must file.
The 2023 participant-count change
This is the part that trips people up. For plan years beginning on or after January 1, 2023, defined-contribution plans (401(k), profit-sharing) count only participants with an account balance at the start of the plan year — not every eligible employee. Before 2023, employees who were eligible but had never contributed still counted toward the 100-participant threshold.
The practical effect: many small-business 401(k)s that auto-enroll or have lots of eligible-but-non-participating employees dropped below 100 balances and no longer need an annual audit. If your plan was close to the line, recheck it under the balance-based count.
The 80-120 participant rule
There's a buffer at the boundary. Under the 80-120 rule, if the number of participants at the beginning of the plan year is between 80 and 120, and a Form 5500 was filed for the prior year, the plan may file in the same category — large or small — as it did the year before. So a growing plan can stay a "small" (unaudited) filer until it exceeds 120, rather than triggering an audit the first year it tops 100.
The small-plan audit waiver
Even some plans that would otherwise file as large can skip the audit if they meet the small-plan audit waiver (29 CFR 2520.104-46): at least 95% of assets are "qualifying plan assets" (mutual funds, bank/insurer accounts, publicly traded securities, participant-directed accounts), or any shortfall is covered by an ERISA fidelity bond, plus certain disclosure conditions. Plans holding hard-to-value or employer non-public securities are the ones most likely to need the audit.
The auditor (IQPA) is disclosed on the Form 5500. Browse auditors by plans served, or spot large filers that reported no accountant.
Browse the providers directory"Employee benefit plan audit" — same thing, broader scope
An employee benefit plan audit is the same IQPA engagement, and it isn't limited to 401(k)s: large defined-benefit pensions, ERISA 403(b) plans, and large funded welfare plans are all subject to it. The audit attaches to the Form 5500 and is due with the filing — generally seven months after plan year-end, plus 2½ months with a Form 5558 extension. Work out your exact date with the Form 5500 deadline calculator, and see Schedule C for how the auditor's fee is disclosed.
Large plans that filed with no auditor named
Live Form 5500 filings from large plans (100+ participants) that reported no independent accountant — the population most likely to have an audit-compliance gap. Open any plan to see what it disclosed.
| Plan / sponsor | Assets | Participants |
|---|---|---|
| AMAZON.COM SERVICES, LLC GROUP HEALTH & WELFARE PLAN · WA | — | 1,194,891 |
| WAL-MART ASSOCIATES, INC. WAL-MART NON-EXEMPT SEVERANCE PAY PLAN · AR | — | 783,999 |
| FEDEX CORPORATION FEDEX CORPORATION VOLUNTARY INSURANCE PLAN · TN | — | 515,982 |
| TARGET CORPORATION TARGET CORPORATION EMPLOYEE UMBRELLA WELFARE BENEFIT PLAN · MN | — | 428,467 |
| FEDEX CORPORATION FEDEX CORPORATION EMPLOYEE ASSISTANCE PROGRAM · TN | — | 382,854 |
| HOME DEPOT USA, INC. THE HOME DEPOT GROUP BENEFITS PLAN · GA | — | 379,812 |
| UNITED PARCEL SERVICE OF AMERICA, INC. UPS BUSINESS TRAVEL ACCIDENT INSURANCE PLAN · GA | — | 377,680 |
| INSPERITY HOLDINGS, INC. INSPERITY WELFARE BENEFITS PLAN · TX | — | 317,587 |
| JPMORGAN CHASE BANK, NATIONAL ASSOCIATION THE JPMORGAN CHASE BUSINESS TRAVEL ACCIDENT (BTA) INSURANCE PLAN · NJ | — | 317,233 |
| CVS HEALTH CORP BUSINESS TRAVEL ACCIDENT INSURANCE · RI | — | 314,003 |
Frequently asked questions
A 401(k) generally needs an independent IQPA audit when it's a large plan — about 100 or more participants with account balances at the start of the plan year. Smaller plans filing Form 5500-SF are usually exempt.
Roughly 100. A plan with 100+ participants at the beginning of the plan year files as a large plan with Schedule H and an audit, subject to the 80-120 rule and the small-plan audit waiver.
For plan years starting on or after January 1, 2023, DC plans count only participants with an account balance (not all eligible employees). Many small plans fell below 100 balances and no longer need an audit.
If a plan has 80-120 participants at the start of the plan year and filed the prior year, it may file in the same category (large or small) as before — so it can stay an unaudited small filer until it exceeds 120.
An Independent Qualified Public Accountant (IQPA) — a licensed CPA firm independent of the plan and sponsor. The auditor is named on the Form 5500/Schedule H.
Usually not. Plans under 100 participants typically file Form 5500-SF without an audit, provided they meet the small-plan audit-waiver conditions (95% qualifying assets or a fidelity bond covering the rest).