As a 401(k) plan sponsor, you have several key responsibilities when it comes to ensuring compliance during a plan audit. These responsibilities include:

1. Plan Administration and Oversight: You must ensure that the 401(k) plan is being managed according to the plan’s terms and ERISA (Employee Retirement Income Security Act) requirements.

2. Accuracy of Records and Reporting: You are responsible for maintaining accurate records regarding plan participants, contributions, distributions, and investments, and ensuring timely reporting, such as submitting the Form 5500.

3. Fiduciary Duties: As a fiduciary, you must act in the best interests of plan participants, ensuring prudent management of assets, proper fee disclosure, and appropriate investment choices.

4. Compliance with ERISA and IRS Regulations: You are responsible for complying with various regulatory requirements set by the Department of Labor (DOL) and the IRS, including testing for non-discrimination, contribution limits, and eligibility.

5. Documenting and Retaining Plan Records: You must ensure that the plan’s documentation (including plan design, investment policies, and participant communications) is up-to-date and accessible.

How a 3(16) Can Help with These Responsibilities

A 3(16) fiduciary can significantly ease the burden of plan administration and help mitigate the risk of non-compliance during an audit. Here’s how:

1. Assuming Fiduciary Responsibility: A 3(16) fiduciary takes on the full responsibility of plan administration, relieving you of much of the fiduciary risk. They ensure that the plan is compliant with all applicable laws and regulations, minimizing your exposure to litigation and regulatory penalties.

2. Plan Documentation and Compliance: The 3(16) will maintain and review the necessary plan documentation and provide accurate filings, including Form 5500. They also handle record-keeping and ensure that required participant disclosures are met.

3. Handling Day-to-Day Operations: A 3(16) fiduciary manages the day-to-day tasks of plan administration, such as processing contributions, managing distributions, and overseeing participant communications, ensuring that the plan is administered consistently and correctly.

4. Support During Audits: In the event of a plan audit, a 3(16) fiduciary helps to ensure that all records, reports, and documents are in order. They assist with providing necessary information to auditors and handling any questions or concerns, which helps streamline the audit process.

5. Reducing Fiduciary Liability: By delegating key administrative and fiduciary responsibilities to a 3(16), you can significantly reduce your personal liability and stress in managing the plan.

In short, working with a 3(16) fiduciary provides expertise, accountability, and peace of mind by ensuring compliance and easing your 401(k) audit obligations.