Employee benefit plan audits: what they are and which plans need one

Last reviewed October 2026. General information about the rules, not legal or tax advice for a specific plan.

An employee benefit plan audit, often called an ERISA audit or a Form 5500 audit, is the independent audit most large employee benefit plans must attach to their annual Form 5500. For a 401(k) or 403(b) plan, large means 100 or more participants with an account balance on the first day of the plan year. Ledgerline audits those two plan types.

What is an employee benefit plan audit?

An independent qualified public accountant examines the plan’s financial statements and the records behind them, and issues a report that is filed with the plan’s Form 5500. Plans filing as large plans file Schedule H and generally must engage that accountant and attach the report.^[1] The auditor must be licensed or certified as a public accountant by a state, and independent of the plan and its sponsor.^[2]

Which plans need an audit?

Plans that file the Form 5500 as large plans.^[1] Each plan type counts differently:

401(k) and 403(b) plans: 100 or more participants with an account balance on the first day of the plan year. A plan filing its first return counts at the end of the year instead.^[1]
Defined benefit pension plans: 100 or more participants at the beginning of the plan year, counting all participants, balance or not.^[1]
Health and welfare plans: 100 or more participants, unless the plan is fully insured, unfunded (paid from the employer’s general assets) or a combination of the two.^[1]^[2]

Governmental plans and church plans do not file a Form 5500 under ERISA at all, and the filing rules for 403(b) programs apply to plans subject to Title I of ERISA.^[3] A 401(k) or 403(b) plan under 100 participants with a balance, or between 80 and 120, has more to weigh: how the count and the exceptions work.

Full scope or ERISA 103(a)(3)(C)?

An ERISA 103(a)(3)(C) audit, still often called a limited-scope audit, lets the auditor rely on a bank’s or insurance company’s certification of the investment information it holds, instead of testing those investments.^[2] It is the usual choice: the DOL found that 83% of plan audits were limited-scope in the 2020 filing year.^[4] A full scope audit tests the investments directly. Either way, contributions, eligibility, distributions, loans and fees are audited, and the plan administrator decides which kind of engagement to use.^[2]

Why does the auditor’s plan experience matter?

The DOL’s most recent study of plan audit quality found that 30% of the audits it reviewed contained major deficiencies.^[4] Experience made the largest difference: firms that audit one or two plans a year had a 70% deficiency rate, against 17% for firms that audit 100 or more.^[4] The DOL’s advice is to ask about the auditor’s training and experience with employee benefit plans, check references, and not choose on fee alone.^[2]

So ask any auditor you are considering, including us, how many plan audits the firm does and how long the partner who would sign your report has worked on them. Our answer: Ledgerline’s founding audit partner has spent seven years working exclusively on retirement plan audits.

What does Ledgerline audit?

401(k) and 403(b) plans. We’re building an audit firm around those two plan types and booking engagements for the coming season, starting December 2026. How a Ledgerline audit works, the fee for your plan, or whether your plan needs an audit.

For TPAs and recordkeepers

Something your clients will thank you for recommending: a fast, low-hassle audit.
We work directly from the data you already maintain, keeping the lift on your team small.
We do one thing: the plan audit. Your administration and recordkeeping relationships stay yours.

Frequently asked questions

Is an ERISA audit the same as a 401(k) audit?

A 401(k) audit is one kind of ERISA audit. ERISA audit and employee benefit plan audit cover every plan type that files its Form 5500 as a large plan, including 403(b), defined benefit and some health and welfare plans.

How is the 100-participant count measured for an audit?

For a 401(k) or 403(b) plan, it is participants with an account balance on the first day of the plan year. For a defined benefit or welfare plan, it is all participants at the beginning of the plan year.

Which employee benefit plans do not need an audit?

Small plans that meet the small plan audit waiver conditions, welfare plans that are fully insured, unfunded or a combination of the two, and governmental and church plans, which do not file a Form 5500 under ERISA.

What does an employee benefit plan audit cost?

It depends mostly on the type and size of the plan. The vendor-neutral fee index on 401kaudithelp.com shows what 401(k) and 403(b) plans paid their auditors, by plan size, as reported in their Form 5500 filings.

A 401(k) or 403(b) plan that needs an audit?

We’re booking engagements for the coming season, starting December 2026. A short call is enough to tell you what your plan would need and when we could start.

Book a call See your fee

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