How Much Does a 401k Audit Cost in the U.S.?

Every year, thousands of U.S. businesses grapple with the 401(k) plan audit requirement and its price tag. If your company’s 401(k) plan is considered a “large plan” by the Department of Labor (generally over 100 eligible participants), an independent audit of the plan’s financial statements is mandated as part of Form 5500 compliance . Naturally, one of the first questions plan sponsors ask is: How much will a 401(k) audit cost? In this article, we’ll break down the typical cost range for a 401(k) audit in the United States, what factors drive those costs, how large CPA firms vs. specialized 401(k) auditors differ in pricing, the indirect costs you should be aware of, and tips for choosing a cost-effective yet reliable audit provider. By building a comprehensive understanding of 401(k) audit costs (and using terms like 401(k) audit firm, limited scope audit, Form 5500 compliance, and audit deadline), you’ll be better prepared to budget and make informed decisions around your plan’s audit.

According to recent data, about 69% of private industry workers have access to employer-provided retirement plans. Offering such access is crucial for companies to remain competitive and provide valuable benefits.

Understanding 401(k) Audit Requirements

If your business sponsors a 401(k) plan, understanding when and why an audit is required is essential for compliance and budgeting. The Department of Labor (DOL) and IRS set clear rules: generally, if your retirement plan has 100 or more eligible participants at the beginning of the plan year, it is classified as a “large plan” and must undergo an annual audit by an independent CPA firm. This audit is a key part of the Form 5500 filing process, which all qualified plans must complete each year.

The audit requirement is triggered by the number of eligible plan participants—not just those actively contributing, but anyone eligible to participate, including current employees, certain former employees with account balances, and even some separated employees, depending on plan specifics. The participant count is determined as of the first day of the plan year, and crossing the 100-participant threshold means your plan is subject to the large plan audit requirement. For example, if your company’s 401(k) plan has 105 eligible participants on January 1, you’ll need to schedule and complete an audit for that plan year.

The purpose of the 401(k) audit is to ensure the plan’s financial statements are accurate and that the plan is being operated in accordance with ERISA, IRS, and DOL regulations. This process helps protect plan participants by verifying that contributions, distributions, and plan assets are properly managed. For employers, a successful audit not only meets regulatory requirements but also demonstrates a commitment to transparency and fiduciary responsibility—qualities that can help attract and retain top talent.

Plan sponsors are responsible for engaging a qualified CPA firm to perform the audit, gathering the necessary data, and supporting the audit process. The audit must be completed in time to meet the Form 5500 filing deadline, typically seven months after the end of the plan year (with an option to extend). Failing to meet these requirements can result in significant penalties and increased costs, so it’s crucial for businesses to monitor their participant count, understand their obligations, and plan ahead for the annual audit.

In summary, if your company’s 401(k) plan is approaching or has surpassed 100 eligible participants, you’ll need to budget for the audit cost, select a reputable audit firm, and ensure all plan records are organized and accessible. Staying proactive helps you avoid compliance headaches and supports the long-term success of your retirement plan and your business.

Typical 401(k) Audit Costs in the U.S.

For most small to mid-sized retirement plans that require an audit, the cost typically falls somewhere in the five-figure range per year. Industry benchmarks and surveys show that a 401(k) plan audit often costs between about $8,000 and $15,000 annually. Here are some examples: a small plan with just over 100 participants might see audit fees at the lower end of this range, while a more complex or larger plan could be at the higher end or above. Many audits for medium-sized plans (those under $50 million in assets) land around $8k–$12k on average, and it’s common to hear that “upwards of $10,000” is a normal starting point for a standard audit engagement.

That said, actual fees can vary quite a bit. Several variables influence where on the spectrum your audit fee will fall (we’ll explore those factors next). For example, some CPA firms that specialize in 401(k) audits offer highly competitive flat fees – a straightforward limited-scope 401(k) audit for a typical company might be quoted around $6,000 by a specialist firm. On the other end, larger accounting firms with big-brand names may charge a premium for the same service. It’s not unheard of for a Big Four firm to quote $20,000 or more for a single 401(k) plan audit, especially for a complex plan or a company that engages them for other services. In one reported case, a Big Four firm billed $36,000 for a 401(k) audit that a smaller specialist firm completed for less than a third of that price. And in surveys of plan sponsors, the high end of 401(k) audit costs has been cited as $18,000 up to $30,000 per year in some instances – generally applying to very large plans or those with unusual complexities.

In summary, most U.S. 401(k) plan audits cost roughly $8k–$15k, but your mileage may vary. The total audit cost equals the base fee plus any additional charges for extra services or complexities. If your plan is on the smaller side of “large” (just over 100 participants), you should budget at least around $10,000 for the audit. If your plan qualifies as a small plan (generally under 100 eligible participants), you may not need an audit at all, which can significantly reduce your costs. Larger plans or those using high-cost audit firms might see bills in the tens of thousands. The next sections will help explain why costs range so widely and how different factors (like plan size, audit scope, and provider choice) play into what you’ll ultimately pay.

What Factors Influence 401(k) Audit Cost?

Not all 401(k) audits are created equal – and neither are their price tags. Auditors determine their fees based on the scope of work required, which can vary greatly from plan to plan. Here are the key factors that influence how much a 401(k) audit will cost:

Number of Plan Participants: The size of your plan, usually measured by the number of eligible participants (including employees with account balances and certain former employees), is a primary cost driver. The more participants, the more transactions and data the auditor must test, which increases hours and fees. A plan with 120 participants will generally cost more to audit than one with 101 participants, all else being equal . (Tip: Only “eligible” participant count matters for the audit threshold – after the 2023 rule change, those without account balances don’t count .) Larger plans can expect higher fees to reflect the additional work required. To estimate the total audit fee, you can multiply the number of participants by a typical per-participant rate used by many audit firms.

Type of Audit – Limited Scope vs. Full Scope: There are two types of ERISA plan audits: a full-scope audit and a limited-scope audit (now officially termed an “ERISA Section 103(a)(3)(C) audit”). A full-scope audit means the auditors test all areas of the plan’s financial statements, including verifying investment balances and investment income from scratch. A limited-scope audit allows the auditor to rely on a certified statement from the plan’s trustee or custodian for asset values, so the auditor does not independently audit those investments . Because a limited-scope audit omits certain procedures (thanks to the bank or trust company’s certification), it requires fewer hours and is generally less expensive than a full-scope audit . In fact, most 401(k) plans qualify for the limited-scope option, and many audit firms base their pricing assuming a limited-scope audit by default. (If a plan cannot obtain the necessary trustee certification and must undergo a full-scope audit, expect the fees to be higher to reflect the extra work.

Plan Complexity and Investments: The complexity of the plan’s design and investments will impact audit cost. A straightforward 401(k) plan with a single service provider and standard mutual fund investments is easier (and cheaper) to audit than one with, say, multiple investment platforms, self-directed brokerage accounts, or hard-to-value assets like real estate or private stock. Plans holding more complex investments may require specialized audit procedures, driving up the cost . Similarly, if your plan offers features like loans, company stock, or has many different contribution types, the audit may involve more testing steps. Complexity = more hours, which = higher fees.

First-Year Audits vs. Repeat Audits: Is this the first time your plan has ever been audited, or are you switching audit firms? If so, be prepared for slightly higher costs in that initial year. First-year audits often entail extra work for the auditors to get familiar with your plan’s provisions, systems, and history . They’ll likely need to test opening balances (reconciling the beginning of year financials to the prior year, even if unaudited) and spend time reviewing plan documents and setup. This onboarding effort tends to make the first audit more expensive than subsequent years. Many firms will factor in an additional fee or hours for a first-year audit . The good news is that after year one, if you continue with the same auditor, they won’t need to redo that foundational work, and your audit fee in year two and beyond should be equal or sometimes lower (barring changes in the plan).

**Changes in Plan or Service Providers:**Unusual events or changes can add to the audit workload. For example, if your company merged with another plan, acquired another company, or had a significant plan amendment during the year, auditors must test those events thoroughly. Likewise, if you changed record-keepers or custodians mid-year, the auditors will have to reconcile data between two systems and possibly perform one-time procedures on the transition . These situations often increase the audit hours (and fee). On the other hand, having stable, well-organized plan records and using reputable service providers can make the audit more efficient. Auditors note that if a third-party administrator (TPA) and recordkeeper provide a quality “audit package” of reports, it streamlines their work . In short, smooth administration and good recordkeeping can indirectly keep your audit costs down, whereas lots of irregularities or changes can push costs up.

Geographic Location and Travel Needs: Where your auditor is located relative to you can play a role in cost. Many firms now perform 401(k) audits remotely (especially since the pandemic), which can save on travel expenses and make pricing more competitive. If you hire an out-of-town auditor who needs to travel on-site, some will charge travel costs or billable hours for travel. A firm that can do the audit virtually or has a local office may help reduce or eliminate travel-related charges. (Some specialized 401(k) audit firms explicitly charge a flat fee plus travel, but will waive travel costs if the audit is done remotely .)

Audit Firm’s Pricing Structure and Overhead: Finally, the type of firm you choose and how they structure fees will influence your cost – so much so that we’ll dedicate the next section to this topic. In brief, each CPA firm sets its own pricing. Some charge hourly rates, while many use fixed-fee pricing for 401(k) audits. Neither method inherently makes the audit cheaper or more expensive, but it affects your certainty. With hourly billing, the final cost can fluctuate if the work takes longer than expected. With a flat fee, you know the cost upfront. Also, larger firms with higher overhead often have higher billing rates, whereas niche firms may run lean operations with lower fees. Let’s compare those in detail next.

In addition to audit fees, you may incur penalties or additional costs if your plan fails to comply with ERISA requirements or misses filing deadlines. These penalties can be significant and add to your overall expenses.

When considering the total cost, remember to account for the internal labor hours paid to employees who support the audit process, such as gathering documents and responding to auditor requests. These paid hours contribute to your company’s overall audit-related expenses.

Pricing: Large CPA Firms vs. Specialized 401(k) Audit Firms

One important factor in 401(k) audit cost is which type of firm you engage to perform the audit. You generally have options ranging from the “Big 4” accounting firms and other large national/regional CPA firms, to mid-sized firms and boutique firms that specialize in employee benefit plan (EBP) audits. The cost difference can be stark: 

Big 4 and Large CPA Firms: The Big 4 (Deloitte, PwC, EY, KPMG) and similar large firms often charge a premium price for 401(k) audits. In many cases, these firms focus on auditing very large plans (thousands of participants) or they perform the 401(k) audit as an add-on service for a major client whose corporate books they already audit. If you’re a Fortune 500 company, you might use a Big 4 auditor, and a $50,000+ fee for a complex plan audit wouldn’t be unusual. But for a typical mid-sized employer’s 401(k) plan, Big 4 quotes tend to be substantially higher than others – sometimes two to three times the going market rate. For example, one plan sponsor noted their Big 4 auditor quoted $36k for a single plan audit, whereas a specialized audit firm offered to do it for under $12k (about one-third the cost) . The brand-name firms have higher billing rates and overhead, and they might staff your plan’s audit with more (or more senior) people than necessary. You’re partly paying for the name and broader firm infrastructure.

Specialized 401(k) Audit Firms: At the other end of the spectrum are CPA firms that specialize in 401(k) and ERISA benefit plan audits. These firms might perform hundreds of plan audits each year and often advertise efficient, flat-fee audits. Because this is their niche, they can streamline the process and price it competitively. Specialized audit firms are also known for reducing the administrative burden on their clients by using efficient workflows and technology. It’s not uncommon to find specialized firms offering flat fees in the range of $5,000–$8,000 for a standard 401(k) limited-scope audit (depending on size and complexity) – significantly undercutting larger firms. For instance, one such specialist firm notes that a “typical” 401(k) audit fee for them is around $6,000 . These firms usually have dedicated EBP audit teams and invest in tools to make gathering data easier, which keeps costs down. Additionally, they are often willing to perform the work 100% remotely, saving travel time and expense. 

Mid-Tier and Regional Firms: Between the two extremes, there are many reputable mid-sized CPA firms (often regional or with specific industry focuses) that do a volume of benefit plan audits. Their pricing will generally fall in between – perhaps in the $8k–$15k range for a typical audit, similar to the averages discussed earlier . Many of these firms also charge flat fees. They may not be as cheap as the boutique specialists, but they often bring strong expertise at a still-reasonable cost, especially if your plan or company has some complexities requiring a seasoned auditor.

Beware of “Too Good to Be True” Low Bids: While cost is important, extremely low audit fee quotes can be a red flag. Beware of very cheap offers from firms that do few 401(k) audits or lack experience. “Bottom feeder” auditors may quote rock-bottom prices but then struggle to execute the audit efficiently or correctly . An inexperienced auditor might end up consuming far more of your time (driving up indirect costs) and could miss critical issues. Worse, poor audit quality can result in overlooked errors, costly corrections, and increased risks for the employer. Remember, the purpose of the audit is to ensure your plan’s financial statements and operations are presented fairly and compliant with regulations. Hiring an unqualified bargain auditor can backfire – if the audit is done poorly and your Form 5500 filing is found deficient, you risk penalties. The Department of Labor (DOL) can levy fines up to $2,670 per day for a deficient filing, with no maximum, and the IRS can impose penalties as well (up to $150,000 per plan year) . In other words, a bad audit could cost far more in the long run than a proper audit by a slightly more expensive, qualified firm. It pays to choose your auditor based not just on price, but on competence and experience.

Bottom line: A specialized 401(k) audit firm or an experienced mid-tier CPA will often provide the best balance of cost and quality for most mid-size plans. They’re likely to offer a flat fee in the low five figures and complete the audit efficiently. Larger firms might be necessary for very large companies or if you need an audit firm with a national presence, but expect to pay a premium. And if someone quotes you an unbelievably low fee, do your diligence to ensure they truly know 401(k) audits inside and out. The next section provides some tips on how to vet and choose an audit provider wisely.

Indirect Costs of a 401(k) Audit (Beyond the Fee)

When budgeting for a 401(k) audit, it’s important to account not just for the auditor’s invoice, but also for the indirect costs that come with the audit process. These often-overlooked costs can include internal staff time, administrative effort, and even potential disruptions to your normal workflow. Here are some indirect or “hidden” costs to keep on your radar: 

Internal Labor and Time: A successful audit will require involvement from your team. Employers must devote time and effort to working with the auditor – gathering documents, answering detailed questionnaires, pulling sample selections, and fixing any data issues that surface. Promptly answering auditor questions is essential to facilitate a transparent, accurate, and timely audit process. This can easily take dozens of hours spread across HR, payroll, and finance staff. For instance, your HR manager might spend time compiling a census of eligible employees, your payroll or benefits coordinator might need to retrieve payroll records and contribution reports, and your controller might assist with financial reconciliations. All this internal labor has a cost (think of the salaries/hourly rates of your team) and an opportunity cost (those employees could otherwise be doing other productive work). Especially in the first year audit, expect a heavier time commitment as everyone learns the process. While a good auditor will try to minimize the burden on you, some disruption is inevitable – plan for it. Consider this internal effort as part of the true cost of the audit.

Data Gathering and Systems Work: Related to the above, there may be costs if you need to extract data from systems or have your IT folks assist. For example, if your recordkeeper’s reports aren’t readily available in the needed format, someone might spend time converting or formatting data for the auditors. In some cases, companies even choose to invest in better reporting tools or to pay their TPA for additional support to ease the audit, which is an indirect expense attributable to the audit requirement. Automation can help reduce the need for interns to handle routine data collection and analysis tasks, allowing your team to focus on more complex aspects of the audit. 

Management and Oversight: Senior management (like a CFO or VP of HR) will likely spend some time reviewing audit results, answering higher-level questions, or liaising with auditors on sensitive issues. While not as time-intensive as the day-to-day data gathering, this oversight is another slice of labor cost to factor in. 

Possible Corrective Actions: The audit might uncover issues – for example, a mistake in administering the plan (such as an eligibility or matching contribution error). While the goal is to find and fix problems, doing so can create additional work. If an audit finding requires you to make corrections (e.g., refunding excess contributions or making a retroactive employer contribution to fix a discrepancy), there’s a cost to implement those fixes. There could also be fees if you involve an ERISA attorney or consultant to advise on corrections. These aren’t costs of the audit per se, but they are costs that result from the audit process shining a light on compliance issues.

Audit Timing and Deadline Pressure: All 401(k) audits have a deadline – generally, the audited financial statements must be ready to file with Form 5500 by seven months after the end of the plan year (July 31 for calendar-year plans), unless you file for an extension to October 15. If you start the audit late or run into delays, there could be indirect costs like overtime for staff rushing to meet the deadline, or fees for expedited services. Missing the deadline can trigger DOL penalties (as noted, they can be steep), so it’s crucial to factor in time to complete the audit. It is essential to have the audit report filed on time to avoid penalties and ensure regulatory compliance. Beginning the audit process early in the year can help avoid last-minute cost spikes or stress.

Plan Asset Usage (if applicable): As a side note, some companies choose to pay the audit fee out of plan assets (which is allowed if the audit is a legitimate plan expense). In that case, the cost is indirectly borne by participants in the form of slightly lower net returns (since plan assets pay the fee). While this doesn’t impact the employer’s financials, it’s worth noting that the “cost” of the audit might be absorbed by the plan. Even then, the plan sponsor should be concerned with getting value for that money and keeping it reasonable, since it affects participants’ outcomes. It is also important that all plan fees, including administrative and investment costs, are clearly disclosed to plan participants to ensure transparency and compliance.

In short, think beyond the invoice. A $10,000 audit fee might actually “cost” your organization significantly more when you account for perhaps 100+ hours of staff time across all departments, plus any ancillary expenses. Understanding these indirect costs is important for a full picture. It also underscores why finding an efficient, knowledgeable auditor is valuable – they can reduce the hours you need to spend and guide you through a smoother process, which saves money in ways that don’t show up on a bill.

Changes in 401(k) Audit Regulations

Recent years have brought important changes to 401(k) audit regulations that directly impact plan sponsors, audit costs, and the number of plans subject to annual audits. One of the most significant updates is the Department of Labor’s revised participant counting formula, which took effect for plan years beginning on or after January 1, 2023. Under the new rule, only participants with account balances at the beginning of the plan year are counted toward the 100-participant threshold, rather than all employees eligible to participate. This change means that many small plans with fewer active participants are no longer required to undergo a costly annual audit, resulting in substantial savings for those businesses.

In addition to the participant counting update, the DOL and IRS have introduced new audit quality standards and disclosure requirements. For example, the implementation of the ERISA Section 103(a)(3)(C) audit (formerly known as the limited-scope audit) has clarified the responsibilities of both plan sponsors and auditors, ensuring that plan assets certified by a qualified institution can be excluded from certain audit procedures. These regulatory changes are designed to improve audit quality, enhance transparency, and reduce unnecessary expenses for plans that do not meet the large plan criteria.

Plan sponsors should also be aware of evolving deadlines and filing requirements. The Form 5500 filing process continues to be closely monitored by the DOL and IRS, and late or incomplete filings can trigger steep penalties—sometimes thousands of dollars per day. Staying current with regulatory changes is essential for employers to avoid compliance issues, manage audit costs, and ensure their retirement plans continue to benefit employees and support business goals.

If your company has experienced growth, mergers, or other changes that could affect your plan’s participant count or structure, it’s important to review the latest regulations and consult with your CPA firm or plan consultant. By understanding and adapting to these regulatory updates, you can determine whether your plan is subject to the annual audit requirement, accurately budget for audit expenses, and maintain compliance with all DOL and IRS mandates. Keeping up with changes in 401(k) audit regulations not only helps you avoid unnecessary costs but also ensures your plan remains a valuable benefit for your employees and a strong asset for your business’s future.

Tips for Choosing a Cost-Effective and Reliable 401(k) Audit Provider

Controlling your 401(k) audit costs isn’t just about driving a hard bargain on fees – it’s about choosing the right auditor and being smart in how you manage the process. Here are some practical tips to help you get the best value without sacrificing audit quality:

Look for Specialized Experience: Focus your search on auditors who specialize in 401(k) and ERISA plan audits or have a dedicated Employee Benefit Plan practice. Experienced 401(k) audit firms will know the common pitfalls and have efficient processes, ultimately saving you time and money. Ask potential auditors how many 401(k/403(b) plan audits they conduct annually. A firm doing 50 such audits a year is likely more up-to-speed than one that does only one or two occasionally. Specialists are also more likely to quote a competitive flat fee because they know exactly how to scope the work. 

Compare Multiple Quotes and Models: Don’t hesitate to get proposals from several firms. Compare not only the price, but what the fee includes. One firm’s $12,000 quote might include everything (financial statement prep, Form 5500 assistance, unlimited support for questions), while another’s $10,000 quote might exclude the actual financial statement drafting or limit how many meetings you get. When comparing, ensure you’re looking at apples to apples. Also consider fee structure – do they bill a flat fee or hourly? If hourly, is there a not-to-exceed cap? Clarity here can prevent nasty surprises later . And remember to ask if the fee might increase in future years or if it’s a first-year promotional rate.

Check References and Credentials: You want a reliable auditor, so do a bit of homework. Ask for references from other plan sponsors of similar size who have used their services. Inquire about the auditor’s credentials: Are they a member of the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC)? Membership indicates a commitment to quality in benefit plan audits. Also verify the firm’s most recent peer review results (an external review of their audit practice) – any findings? A firm with a clean peer review and good references is less likely to cause headaches.

Assess Communication and Service: During the proposal stage, note how responsive and clear each firm is. A good auditor should outline a plan and timeline for the audit and explain what they’ll need from you. This is a clue to how organized they are. Ask them how they conduct the audit – on-site or remote, and over approximately what timeframe. If you prefer minimal disruption, a firm that can do a remote audit via secure portals and email (with maybe a short on-site visit or even none at all) could save your staff time. Also, ask how many hours of your staff’s time they expect to need. Some firms explicitly estimate this for you . If one auditor says “about 40 hours of your team’s time” and another says “we handle most of it, you’ll just spend 10 hours,” that’s a factor to consider in cost-efficiency (time is money!). Choose an auditor whose process aligns with your working style and capabilities.

Inquire About Extras and Support: Be sure to ask what services are included in the base fee. Will the auditor prepare the financial statements and notes as part of the audit, or do they charge extra for that ? Will they assist with the Form 5500 filing (some auditors will coordinate with your TPA or even help review the Form 5500 before submission)? Do they charge extra if they have to audit an operational error correction or if additional consulting is needed? A transparent firm will make it clear what is included and what would trigger out-of-scope fees. Opt for a provider with minimal hidden fees and one that doesn’t nickel-and-dime for every little task.

Consider the Firm’s Stability and Continuity: Audit efficiency often improves in the second and third year with the same auditor. If possible, you want a firm that will be around for the long haul and won’t rotate staff constantly. Ask who will be the lead auditor and if you can expect the same team each year. High turnover could mean retraining new auditors about your plan each time (which can indirectly raise costs). A stable, smaller team might be more invested in keeping you as a long-term client, leading to better service.

Plan Ahead and Leverage Off-Season: Timing can influence cost. If you engage an auditor at the last minute (June or July for a calendar-year plan), you may have fewer choices (the best-value auditors could be fully booked) and possibly higher fees due to rush. Try to select your auditor early (even in January or February) and schedule fieldwork well before the deadline. You might even negotiate a discount by being flexible on timing – some firms charge less if they can perform the audit in, say, April or May instead of the crunch time of July. Spreading the work over a longer period or during the auditor’s slow season can be a win-win.