In 401(k) plan audits, digital tools and AI-powered platforms are helping plan sponsors and auditors streamline processes, reduce errors, and save time. The result? A smarter, more efficient audit experience that’s better for everyone involved, whether you’re preparing for your first audit or you’ve been through a few rounds.
Here’s how plan sponsors can make the most of today’s AI and tech tools to simplify the 401(k) audit process.
Automate and integrate with your payroll and HR systems
Many popular payroll and HR platforms offer built-in features that support 401(k) plan administration and audit prep. These systems can generate reports that track employee eligibility, contribution limits, and loan balances, often with just a few clicks.
If your payroll provider integrates directly with your plan’s recordkeeper or TPA, you can automate the transfer of retirement plan data. This reduces manual entry and lowers the risk of data mismatches. Some platforms also flag missing or inconsistent information, giving you a chance to correct it before your auditor ever sees it.
Tap into AI features in your accounting software
Accounting platforms increasingly offer AI-powered features like auto-reconciliation, anomaly detection, and smart categorization. All of these can help streamline your audit.
For example, you can use your accounting system to cross-check contribution deposits against payroll dates, identify timing gaps, or flag unusual entries that could signal an error. Having that data clean and ready makes it easier for auditors to confirm your compliance with DOL and IRS requirements.
Pro Tip: When dealing with sensitive info, ONLY use AI tools native to your accounting or payroll software or designed for confidentiality and compliance. Do NOT use public tools like ChatGPT, as your data will not be secure.
Store and organize documentation year-round
When an anomaly pops up—a missed contribution, a late deposit, a corrected deferral—it’s best to document it right away. Keep a dedicated folder for these instances. Include a brief summary of how these cases were resolved, and it will be far easier to prepare for the audit later.
You can use your own secure platform to maintain these records internally. Just be sure to organize them clearly—by issue type, date, or payroll period—to avoid scrambling during audit season.
While your audit firm typically uses its own secure system to share documentation, maintaining a well-organized internal archive of key documents means you’re always a step ahead.
Pro Tip: For more tips on preparing for your next audit, see this checklist.
Use tools that track changes and support transparency
If your systems offer audit trails or change logs, enable them. These features record who made changes, when they were made, and what exactly changed—useful when questions come up about participant eligibility, loan processing, or deferral election changes.
Audit trails are especially helpful for answering questions. They build transparency and can speed up the review process significantly.
Work with your recordkeeper or TPA to close the loop
Talk to your third-party administrator or recordkeeper about data integration options. Some platforms offer automated feeds that allow data to flow directly from payroll to the recordkeeper. This keeps participant info and contribution data in sync.
When your systems speak to each other, there’s less room for errors—and less time spent on manual reconciliations during the audit.
Putting it all together
The technology available to plan sponsors today, when used strategically, can significantly improve the 401(k) audit process. And, technology alone isn’t enough. It still takes an experienced auditor to interpret findings, ask the right questions, and guide clients through the process with clarity and insight.
At Cassell Plan Audits, we work with clients using a variety of systems and platforms—we went digital before it was cool! We’re happy to provide guidance on how to prepare in a way that works for your team. We combine modern technology with deep retirement plan expertise to make your audit experience as smooth and straightforward as possible.
If you’d like to talk about how to prep smarter (not harder) for your next audit, we’re here to help. Contact Cassell Plan Audits today.
Photo by Tara Winstead
