Employee Benefit Plan Audit Case Study

Challenge

Our client did not know they had an issue until we uncovered it during our testing of their 401(k) plan.  In our first year of auditing the plan we selected a couple of employees that had worked overtime hours on Sundays (“double time”), but the Company’s payroll process was improperly calculating the amount of employee deferrals (and therefore related Company matching contributions) to be contributed to the plan.

Solution

Based on the results of our testing we worked with management to determine which employees worked double time hours and calculated the amount of employee deferrals, employer matching contributions and lost earnings on the missed contributions.  We assisted the client in remedying the situation by advising them on making the required payment and reporting the amounts to the Internal Revenue Service and Department of Labor.

Results

Client was in compliance with their Plan document, the Internal Revenue Service and Department of Labor, and enhanced the relationship with their employees.

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