401(k) Audit

[Guest Bruce H.]

Due to the economic conditions over the past 5 years, our sales, employment, and the number of participants in our 401(k) have dropped dramatically. We had audits from 2006-2009 because our participant total was above 120. At the beginning of 2010, we still had 106 eligible participants, but by the end of the year that number dropped to about 85.

Our last audit cost about $12,000 which was paid for by the company because the plan has less than $1 million in assets. That $12,000 is a very steep cost for us this year. Clearly, we won't need an audit for 2011 since we have less than 100 participants.

Is there some type of hardship exemption from an audit for a situation like this?

[Ron Snyder]

Try attaching the previous year's audit on the basis that the current audit has not been completed. That might get them off your case for a year.

[Note: the DOL may still come after you, but I have seen this work.]