Why Organizations with Greater than 100 Employees Can’t Afford to Overlook Their 401(k) Audit Obligations

Case Insight: LeBoeuf v. Entergy Corp. Shows What’s at Stake

If your organization has more than 100 eligible participants in its 401(k) plan, chances are you’re required to undergo an annual independent audit in connection with your Form 5500 filing. But it’s not just about compliance, it’s about protecting your plan, your people, and your fiduciary reputation.

A recent federal court case, LeBoeuf v. Entergy Corp., 2025 WL 1262414 (5th Cir. 2025), illustrates why a properly scoped and executed audit is more critical than ever, especially for growing employers nearing or crossing that 100-participant threshold.

What Happened in the LeBoeuf Case?

After a 401(k) plan participant passed away, his adult children contested the distribution of his $3 million retirement benefit to his surviving spouse. The participant had named his children as beneficiaries after his first wife’s death, but he never updated the form after remarrying even though the plan documents stated that marriage would automatically revoke any prior designations unless a new spousal waiver was submitted.

While the formal plan documents and Summary Plan Description (SPD)s clearly explained this rule, quarterly account statements from the plan’s trustee still listed the children as the beneficiaries, leading to confusion and ultimately, a lawsuit.

The Fifth Circuit with its recent court ruling upheld the plan committee’s actions, but the case highlighted a serious gap: conflicting communications from service providers can create legal and fiduciary exposure even when plan documents are technically compliant.

Why This Matters to Your Organization?

If your employee count is between 95 and 135, you are likely:

• Nearing or exceeding the “large plan” audit threshold (100 participants on the first day of the plan year).
• Relying on third-party recordkeepers or trustees to produce account statements and track participant data.
• Trusting that your internal or external HR systems align with ERISA rules without full visibility into whether your service providers' systems reflect those requirements.

Here’s the issue: quarterly statements, online portals, and informal communications may contradict formal plan terms and auditors are often the only line of defense to catch these discrepancies before litigation arises.

What Should Your Plan Audit Cover?

A well planned benefit plan audit doesn’t just satisfy DOL requirements, it protects your organization from operational and fiduciary risk. For plans hovering around the 100-participant threshold, the audit should include:

✅ Key Audit Procedures:

• Verification that plan documents, SPDs, and beneficiary forms are aligned.
• Evaluation of how life events (like marriage, divorce, or death) are tracked and communicated to participants.
• Review of service provider SOC 1 Type 2 reports with an increased focus on controls over: Beneficiary updates Spousal waivers Statement accuracy Automated event triggers
• Testing whether plan administrators are meeting their ERISA fiduciary duties, including responding to participant questions clearly and timely.

Act Now: Form 5500 Deadline Is Approaching

If your plan had 100 or more eligible participants on January 1, you must include an independent audit report with your Form 5500, which is generally due July 31 (or October 15 with extension).

Failure to submit an audit report on time can result in:

• Costly DOL penalties—up to $2,586 per day late.
• Rejection of your Form 5500 filing.
• Increased audit risk and potential investigation into plan governance.

If your organization has 95 eligible participants or you simply do not know, don’t wait until it’s too late to determine whether your 401(k) plan requires an audit. Even if your plan is under 100 participants today, former employees with account balances still count toward the threshold.

Let’s get ahead of this, schedule your audit today and ensure your Form 5500 is filed on time, complete, and is audit ready.

Protect your plan. Protect your people. Comply with confidence. Contact me at ahusseincpa@gmail.com or (404) 287-8042 to schedule your plan audit before the deadline.

Ahmed Hussein, CPA, is an expert in DOL-regulated audits and ERISA compliance, helping plan sponsors avoid costly errors and maintain fiduciary integrity. For more insights, follow on LinkedIn or visit ahmedhussein.net for blog posts of our favorite articles.