Switching your 401(k) plan auditor: how it works

When is the best time to switch auditors?

Between engagements: once the current year’s report is signed and the Form 5500 is filed, and before the next year’s fieldwork begins. Nothing is paid for twice, and the new auditor starts from a finished prior year.

Switching partway through an audit is possible too. Two things to check first. Your current engagement letter sets out what is owed for work already done. And the new auditor has to perform its own procedures before it can sign, so leave room before the filing deadline: July 31 for a calendar-year plan, or October 15 with a Form 5558 extension.^[5] If that date is already close, see your options when the audit isn’t done.

What happens with the previous auditor?

Before accepting your plan, the new auditor has to ask you to authorize the previous auditor to respond fully to its questions.^[3] Then:

• The new auditor asks what affects its decision to accept. Since audits of periods beginning on or after June 30, 2023, that includes any identified or suspected fraud, and any noncompliance with laws and regulations that came to the previous auditor’s attention.^[3]
• The previous auditor is expected to answer. Under the AICPA’s standards it should respond promptly and on the basis of known facts, absent unusual circumstances such as threatened litigation.^[3]
• Refusing has a cost. If you decline or limit that permission, the new auditor has to ask why and weigh it before deciding whether to take the plan on.^[3]

You do not need the previous auditor’s agreement to switch. Choosing the auditor is the plan administrator’s decision.^[1]

What carries over, and what doesn’t?

• Carries over: your plan’s records, your recordkeeper and payroll data, and the prior years’ audited financial statements and reports, which were filed with your Forms 5500.
• Reviewed, not handed over: the previous auditor’s workpapers. For a first engagement the new auditor reads the most recent audited financial statements and report, and with your permission reviews the previous auditor’s work to support the opening balances.^[4] The previous auditor may ask the new one to sign an acknowledgment letter before giving access.
• Stays where it is: the previous auditor’s opinions. Earlier years remain covered by their reports; the new auditor reports on the years it audits.

Do you have to report the switch on your Form 5500?

Yes, and most sponsors do not know it. A large plan reports the termination of its accountant on Schedule C, Part III, for the plan year in which the termination happened.^[2] The DOL’s own example: an accountant terminated during the 2025 plan year, after finishing the 2024 audit, goes on the Schedule C filed with the 2025 Form 5500.

The report explains the reasons for the change and describes any material disputes or disagreements, even ones resolved before the termination. The plan administrator also gives the previous accountant a copy of that explanation, with a notice that they may comment on it to the DOL.^[2] Schedule C is public, so write the explanation accordingly.

What is an IQPA?

An independent qualified public accountant, the auditor a plan’s Form 5500 audit requires. Two tests, in the DOL’s words: the auditor “must be licensed or certified as a public accountant by a State regulatory authority”, and should not have “any financial or other conflicts of interests with respect to the plan or the plan sponsor” that would affect an objective opinion.^[1]

How should you choose the new auditor?

The DOL calls hiring the auditor one of the plan administrator’s most important fiduciary responsibilities, and gives a short checklist:^[1]

• Verify with the state board that the auditor holds a current license.
• Ask whether its employee benefit plan work has been peer reviewed, and request the results.
• Ask about its training and experience auditing employee benefit plans.
• Get references and discuss its work on similar plans.
• Do not decide on the lowest fee alone.

How does Ledgerline handle a switch?

Ledgerline is building an audit firm that does one thing, the ERISA 401(k) plan audit, and we are booking engagements for the coming season, starting December 2026. If you switch to us:

• Same fixed fee, no switching charge, whether you switch between engagements or partway through one. See the fee for your plan.
• We ask your permission before contacting your current auditor, and record what they tell us, as the standards require.
• Your documents go on one checklist split by who holds them, so your TPA, finance and HR contacts each see only their own items. How a Ledgerline audit works.

Frequently asked questions