Your 401(k) plan may need its first audit.
If more than 120 people had balances in the plan on January 1, 2026, it does. Here's how to check, what it costs, and what to do first.
- Plan year
- January 1 – December 31, 2026
- Form 5500 due
- August 2, 2027, with the audit report attached
- With extension
- October 15, 2027 (the audit work doesn't extend)
Twenty pages, no sign-up. Fixed fee, confirmed on a 20-minute call.
Do you need an audit?
The test is participants with account balances on the first day of the plan year — not headcount, not payroll. The number lives in your recordkeeper's report; ask for it and you'll know in a day.
- Under 100No audit.
- 100–120A plan that filed as a small plan last year can usually elect to keep filing small (the 80–120 rule).
- Over 120Large-plan filing. An independent audit must be attached to the Form 5500. The 80–120 election isn't available.
Existing calendar-year plan. New plans, mergers, short years and pooled arrangements have their own rules — the guide covers them on page 5.
What a first-year audit costs
Fixed fee, confirmed on a short call. Two questions get you the number.
The fee covers a first-year audit including intake, reconciliation of provider data and opening-balance work. Financial statement preparation from plan records, if needed, is scoped separately. Unusual investments, missing records or multiple employers can change the fee; we'll tell you before we start.
Your Company's First 401(k) Audit
Twenty pages for the person who has to handle it: how to confirm the requirement, who's responsible for what, which records to request from each provider, what usually goes wrong, and eight questions to ask any auditor before you sign. Written by Charles Renwick, CPA, CFA and Nick Blossman, CPA. Useful whichever firm you choose.
Want a printed copy for your file? Ask for one and we'll mail it.
Request a first-year audit proposal
Fixed fee, in writing, usually within one business day. You don't need a finished audit package — just the basics.
Please don't send participant Social Security numbers, payroll detail or account-level records through this form. We'll set up secure delivery when the audit starts.
Twenty minutes with Charles
Bring your plan year, last year's filing and your recordkeeper's name. He'll tell you whether an audit is required, what it would cost, and what to do first — and he'll say so if you don't need one.
Printed copy of the guide
Leave your name and mailing address and we'll post one this week.
Questions
How do I know if the plan needs an audit?
Count participants with account balances on the first day of the plan year. Over 120: audit required. 100–120: you can usually keep filing as a small plan if you did last year. Under 100: no audit. Your recordkeeper has the number.
We heard the threshold is 100. Why 120?
Both are right. 100 is the normal large-plan line; the 80–120 rule lets a plan that filed small last year keep doing so up to 120. Above 120 the election isn't available.
When is it due?
For a December 31, 2026 plan year, the Form 5500 with the audit report attached is due August 2, 2027. A timely Form 5558 extends the filing to October 15, 2027. It does not extend the audit work.
Can the audit be done remotely?
Yes. Records come through a secure portal, meetings happen by video, and provider reports come directly from the provider. Remote doesn't mean less evidence; it means less travel.
What does it cost?
A fixed fee, quoted in writing before we start. Most first-year audits of plans in the 121–200 participant range fall in . The fee includes intake, reconciliation of provider data and opening-balance work.
Who pays the audit fee?
The audit fee is generally a permissible plan administrative expense. Whether the plan pays it from plan assets or the company pays it depends on your plan document and is a decision for you and your TPA; we'll point you to the provision.
We're under 120. Are we done?
Probably. The exception is a plan that previously filed as a large plan, where different rules apply. The guide covers it on page 4, or ask us.
What if we already have an auditor?
Use the guide anyway — the records checklist on pages 10–11 is what any auditor will ask for. If you'd like a second fixed-fee quote beside what you're paying, request one above.
What happens after I request a proposal?
Charles reads it, calls or emails within one business day, and sends a written fixed-fee proposal with a calendar. If you sign, the first records request goes out the same week.
About CMR Associates
CMR Associates is a CPA firm founded in 2014 and based in Mandeville, Louisiana, with a team of about thirty serving businesses across the country. Partners Charles Renwick, CPA, CFA and Nick Blossman, CPA lead every plan audit personally and are the authors of The 401(k) Audit Playbook and the first-year guide on this page.
The audit practice is built for first-time plan audits: fixed fees, fully remote fieldwork, a standard first-year approach that starts from the records your providers already keep, and a partner who answers the phone.