Does Your Client's Benefit Plan Need an Audit? Key Signs & Steps for Brokers

Employee benefit plans are a critical part of an organization’s compliance, financial health, and employee satisfaction. However, these plans require regular audits to ensure they remain effective, competitive, and legally compliant. As a benefits broker, you play a crucial role in guiding clients through this process. But how can you determine when it’s time for an audit?

Signs Your Client’s Benefit Plan Needs a Review

1. Compliance Risks and Regulatory Changes

Benefit regulations, such as ERISA, ACA, HIPAA, and COBRA, frequently change, requiring employers to stay up to date. If plan documents, filings, and procedures haven’t been reviewed recently, clients could face penalties, lawsuits, or regulatory scrutiny. Ensuring compliance through an audit minimizes legal risks and protects both employers and employees.

SECURE 2.0 Compliance Considerations

The SECURE 2.0 Act, signed into law in 2022, was designed to expand retirement plan access, increase savings opportunities, and reduce administrative burdens for employers. Several key provisions of the act took effect in 2025, making audits more critical than ever. Brokers should ensure clients are prepared for:

• Mandatory Automatic Enrollment: New 401(k) and 403(b) plans must automatically enroll employees at a minimum of 3%, increasing annually until at least 10% (up to 15%).
• Expanded Eligibility for Part-Time Workers: Employees working at least 500 hours for two consecutive years (down from three) must now be eligible for retirement plans.
• Increased Catch-Up Contributions: Participants aged 60-63 can contribute more to their retirement savings, requiring employers to update plan designs.
• New Audit Thresholds: Under SECURE 2.0, plans only require an audit if they have over 120 account balances for initial audits or 100 account balances for recurring audits. This change replaces the previous rule that required audits for plans with 100+ eligible participants at the start of the year. Not every small business will require an EBP audit under the new rule, but that doesn't mean they shouldn't conduct one.

Check out this blog for more information on Secure 2.0 and key changes for 2025. 

2. Rising Costs Without Clear Justification

If benefits costs are climbing unexpectedly, an audit can pinpoint areas of inefficiency. Employers may be overpaying for outdated plan options, unnecessary coverage, or underutilized benefits. By analyzing spending patterns and plan usage, brokers can help clients optimize costs while maintaining competitive offerings.

3. Low Employee Engagement or Confusion

If employees frequently ask about their benefits, struggle with the enrollment process, or underutilize certain offerings, there may be communication gaps. An audit can assess whether employees fully understand and appreciate their benefits and whether additional education or improved messaging is needed to enhance engagement.

4. Workforce Changes

Significant shifts in workforce size—such as mergers, acquisitions, layoffs, or rapid expansion—can impact benefit eligibility, costs, and overall plan design. A benefits audit ensures that the plan remains aligned with the organization's current workforce needs and financial realities.

5. Issues with Claims or Carrier Discrepancies

Errors in claims processing, delays in reimbursements, and billing discrepancies can indicate administrative inefficiencies. An audit can help uncover incorrect charges, enrollment errors, or provider mismanagement, ensuring employers and employees receive the coverage and service they expect. For information on how BerniePortal has mitigated the risk of claim issues and carrier discrepancies, check out our blog on BernieBill.

6. Dependent Eligibility Verification

Covering ineligible dependents leads to unnecessary costs and compliance risks. Conducting periodic dependent eligibility audits ensures that only qualified individuals are enrolled, helping to control costs and reduce exposure to legal challenges.

7. 401(k) and Retirement Plan Fee Overpayments

Employers often overpay for retirement plan administration and investment management. Many fail to benchmark their 401(k) fees against industry averages, resulting in excessive costs. A thorough audit can uncover hidden fees and ensure that clients are receiving competitive pricing and appropriate services from their providers.

8. Knowing Which Benefit Plans Require Audits

• Defined contribution plans (401(k), 403(b), and employee stock ownership plans)
• Defined benefit pension plans
• Health plans

What Is Form 5500?

Form 5500 is an annual return/report that businesses must file with the Department of Labor (DOL), IRS, and Pension Benefit Guaranty Corporation (PBGC) to provide details on the financial condition, investments, and operations of their employee benefit plans. This form is critical for maintaining compliance with ERISA regulations. Failing to file Form 5500 accurately and on time can result in costly penalties, making it essential for brokers to assist clients in preparing and reviewing these filings.
Employers should also confirm with their brokers and administrators that all necessary forms have been completed accurately, ensuring no compliance gaps.

9. Preparing for the July 31st EBP Audit Deadline

• Review plan details and audit requirements to confirm if SECURE 2.0 has changed their audit status.
• Check with auditors on progress and confirm if an extension (Form 5558) is necessary.
• File Form 5558 for any impacted plans before the deadline.

Proactive planning helps clients stay on track, reducing last-minute stress and ensuring future compliance.

The Broker’s Role in Facilitating Audits

• Plan Benchmarking: Compare benefits offerings against industry standards to ensure competitiveness and value.
• Cost Optimization: Identify opportunities to reduce costs without compromising coverage.
• Compliance Review: Ensure all documents, filings, and reporting meet regulatory requirements, including new mandates from the SECURE 2.0 Act.
• Employee Education: Simplify benefits communication and enhance engagement through clear messaging and tools.
• Carrier & Vendor Assessment: Evaluate providers to confirm they deliver promised services at reasonable costs.
• Long-Term Strategy: Establish a regular audit schedule and develop a roadmap for future plan enhancements.

As a benefits broker, your expertise can guide employers through the EBP audit process, helping them stay competitive and ensuring their benefits plans deliver maximum value. By encouraging regular audits, you position yourself as a key partner in your clients’ long-term success. And, don't forget, BerniePortal is your trusted partner in this process. With BerniePortal, brokers can streamline benefits administration and provide clients with an intuitive, centralized platform to manage their plans efficiently.

Additional Resources: 

• Brokers’ Corner Podcast—watch and subscribe to the Brokers’ Corner podcast, which dives into the topics that affect your agency and industry and identifies strategies so you can protect and grow your book of business 
• BerniePortal Brokers’ Council—a council of benefits brokers from across the country that advises BerniePortal on industry concerns, trends, and the ways technology can best support their agency and employer groups 
• BerniePortal for Brokers—leveraging technology to increase your agency valuation and support your employer groups is easier than ever with BerniePortal’s software solution, built for brokers by brokers