A 401(k) audit cost typically runs between $8,000 and $20,000 per year, with straightforward mid-sized plans landing near the low end and larger or more complex plans pushing toward the top. Full-scope audits and plans holding hard-to-value assets can climb past $30,000. The final number depends on the type of audit your plan qualifies for, how many participants you have, and how clean your records are when the auditor walks in.
Typical Price Ranges by Audit Type
Two audit formats exist under ERISA, and which one applies to your plan is the single biggest factor in the fee.
ERISA Section 103(a)(3)(C) Audits
Most 401(k) plans qualify for an ERISA Section 103(a)(3)(C) audit. The auditor is allowed to rely on financial certifications provided by a qualified bank, trust company, or insurance carrier instead of independently verifying every investment holding.1eCFR. 29 CFR 2520.103-8 – Limitation on Scope of Accountants Examination Skipping the investment-level testing makes these engagements faster and cheaper.
A mid-sized plan with 100 to 500 participants generally pays $8,000 to $15,000. Larger plans with 500 to several thousand participants typically fall in the $12,000 to $20,000 range.
This audit format was previously called a “limited-scope audit.” The scope did not change when the name did; the auditor still relies on the institution’s certification.
Full-Scope Audits
If your plan’s investments are not held by a qualifying institution, or the institution cannot provide a proper certification, a full-scope audit is required. The auditor must independently verify every aspect of the financial statements, including investment valuations. Standard plans typically run $15,000 to $25,000 under this format. Plans with thousands of participants, unusual asset classes, or complex benefit structures can see fees above $30,000 to $40,000.
What Drives the Fee Up or Down
Auditors price by the hours they expect to spend verifying your data. Several factors move that estimate:
- Plan complexity. Participant loans, employer stock, multiple investment tiers, and self-directed brokerage accounts each add testing. More moving parts, more hours.
- Number of participants. Auditors sample individual transactions like contributions, distributions, and loan repayments. The sample size grows with headcount.
- Record-keeping quality. Clean payroll records, census data, and trust statements let the auditor move quickly. Incomplete or conflicting records force reconciliation work and raise the bill.
- Investment types. Standard mutual funds are straightforward. Real estate, private equity, and employer stock require specialized expertise and additional verification.
- Auditor firm size and location. National firms with dedicated employee benefit plan practices tend to charge more than regional or local firms, though they may complete the work faster.
Does Your Plan Actually Need an Audit
Before budgeting for one, confirm you are required to have one. ERISA requires every “large plan” to hire an independent accountant to examine the plan’s financial statements each year, with the audit report filed alongside the annual Form 5500.2U.S. Department of Labor. Advisory Council Report on Employee Benefit Plan Auditing and Financial Reporting Models Plans with fewer than 100 participants at the start of the plan year are generally exempt.
For plan years beginning after December 31, 2023, Section 104 of SECURE 2.0 changed the counting method. You now count only people who actually have an account balance, not everyone eligible.3U.S. Department of Labor. SECURE Act and Related Revisions to Employee Benefit Plan Reporting Requirements The count includes active employees with balances, terminated employees still holding money in the plan, participants with outstanding loans, and beneficiaries or alternate payees receiving benefits under a qualified domestic relations order. Eligible employees who never enrolled and former employees whose balances were fully distributed do not count.
The DOL’s 80-to-120 rule provides a cushion for growing plans. A plan that filed as a small plan in the prior year can continue filing as small, and skip the audit, as long as the participant count stays at or below 120 at the start of the current plan year.4U.S. Department of Labor Employee Benefits Security Administration. Frequently Asked Questions On The Small Pension Plan Audit Waiver Regulation Once it hits 121, you must file as a large plan and engage an auditor.
Who Pays the Audit Fee
ERISA allows reasonable plan administration expenses, including audit fees, to be paid directly from plan assets. The statute permits fiduciaries to use plan assets for “defraying reasonable expenses of administering the plan.”5eCFR. 29 CFR 2550.404a-1 – Investment Duties An independent CPA audit fits within this category because it benefits participants through oversight of the plan’s finances.
Many employers still pay the fee from corporate funds instead. There is no legal requirement either way. If you charge the audit to the plan, document your reasoning and your process for selecting the auditor so the expense is defensibly reasonable. Settlor expenses, meaning costs tied to setting up, designing, or terminating the plan, cannot be paid from plan assets regardless.
How to Keep the Cost Down
Preparation is the biggest lever you control. Auditors usually request the plan document and amendments, census data covering every employee’s eligibility, dates, compensation, and balances, payroll records showing wages and deferrals actually withheld and deposited, monthly or quarterly trust statements, and full records of every distribution, hardship withdrawal, rollover, and loan. Your third-party administrator and recordkeeper should also provide SOC 1 reports so the auditor has assurance on their internal controls.
Gathering these into a shared digital folder before fieldwork begins can shave hours off the engagement. If your payroll provider or administrator is slow to produce reports, start requesting them well before the audit starts. Waiting until the auditor asks is the most common cause of timeline delays and cost overruns.
Picking the Right Auditor
Not every CPA firm is equipped to audit a retirement plan. ERISA audits follow specialized standards, and the DOL has noted that auditors should have no financial conflicts of interest with the plan or its sponsor.6U.S. Department of Labor. Selecting an Auditor for Your Employee Benefit Plan When comparing firms, check for membership in the AICPA’s Employee Benefit Plan Audit Quality Center, which requires staff to complete at least 8 hours of employee benefit plan-specific continuing education every three years and undergo peer review that includes ERISA engagements.7AICPA & CIMA. EBPAQC Mission and Requirements Ask for the most recent peer review report, and ask how many retirement plans the firm audits each year. A specialist with a higher hourly rate often costs less overall than a generalist who has to learn the standards on your engagement.
Filing Deadlines and What Late Filings Cost
The audit report attaches as a PDF to your annual Form 5500 and files electronically through EFAST2.8Department of Labor, Pension Benefit Guaranty Corporation, Internal Revenue Service. 2025 Instructions for Form 5500 Annual Return/Report of Employee Benefit Plan The deadline is the last day of the seventh calendar month after your plan year ends, which is July 31 for calendar-year plans. Filing Form 5558 before that date automatically extends the deadline to the 15th day of the third month after the normal due date, meaning October 15 for calendar-year plans.9IRS.gov. Form 5558 – Application for Extension of Time To File Certain Employee Plan Returns
Missing the deadline, or filing without the required audit report, triggers penalties from both agencies on separate tracks. The DOL penalty runs up to $2,739 per day for each day the filing is late, with no maximum cap, under the 2025 inflation-adjusted amount for ERISA Section 502(c)(2).10Federal Register. Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2025 The IRS penalty adds $250 per day, up to $150,000 per late return, plus interest.11Internal Revenue Service. Penalty Relief Program for Form 5500-EZ Late Filers These figures dwarf the audit fee itself.
The DOL’s Delinquent Filer Voluntary Compliance Program cuts the exposure sharply if you come forward before being contacted. The penalty drops to $10 per day, capped at $2,000 per filing for large plans and $750 per filing for small plans.12U.S. Department of Labor. Delinquent Filer Voluntary Compliance (DFVC) Program Small plans sponsored by a 501(c)(3) tax-exempt organization also fall under the $750 cap. Filing through DFVCP as soon as you notice a missed deadline is far cheaper than waiting for the DOL to reach out.