Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

What is a 401(k) plan census report?

A 401(k) plan census report is a document that compiles employee information on all employees who were paid during the plan year. The census will often provide details on an employee’s name, date of birth, social security number, date of hire and termination, gross compensation, hours worked, employee deferrals, matches, highly compensated employees (HCEs) and non-highly compensated employees (NHCEs).

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The information provided by the census is used to run the annual non-discrimination testing as required by the IRS. A big component in this non-discrimination testing is identifying HCEs and NHCEs and ensuring that the company’s 401(k) plan does not discriminate in favor of HCEs. In addition, this information is used to ensure that contributions made by employees and the employer are accurate. It is important the census data is complete and accurate, as the information is used for plans to maintain their qualified tax status. In addition, the census is a major component to the overall 401(k) audit.

During the audit, the census information is tested for completeness by reconciling compensation and contributions to the payroll reports and to the plan trust statement. Once the completeness of the census has been tested, census data is typically used to create participant sample selections, test the contribution schedule for the timeliness of contributions, and is compared back to other documents provided by the client. As this document is used in many areas of the audit, it is vital that the information is accurate. Incorrect data could lead to major problems within the audit testing and potentially impact the timeliness of the audit and audit fees.

Please contact your Henry+Horne advisor with any questions.

Darcy Mayo