Business Articles
SECURE 2.0 Is Changing Employee Benefit Plan Audits
The SECURE 2.0 Act continues to reshape retirement plan administration, and those changes are beginning to affect employee benefit plan audits in a more direct way.
For plan sponsors, compliance is no longer just about updating plan documents. Auditors are increasingly focused on how plans operate day to day, including payroll processes, eligibility tracking, and contribution handling.
As new provisions have taken effect in 2025 and 2026, employers should take a closer look at whether their systems, controls, and procedures are ready.
Operational Compliance Is Taking Center Stage
One of the biggest shifts under SECURE 2.0 is the increased emphasis on operational compliance.
Historically, many plan reviews focused heavily on plan documentation. While documentation remains important, auditors now place greater attention on whether the plan is operating in accordance with current law and IRS guidance.
That includes:
- Payroll system accuracy
- Participant eligibility tracking
- Proper contribution classification
- Coordination between HR, payroll providers, and third-party administrators
This means operational gaps that may have previously gone unnoticed are more likely to surface during an ERISA audit.
Automatic Enrollment Requirements Are Expanding
Most new 401(k) and 403(b) plans established after December 29, 2022 must now include automatic enrollment and automatic escalation features.
Eligible employees generally must be enrolled automatically at deferral rates between 3% and 10%, with future increases built into the plan design.
For employers, this creates additional pressure on payroll systems and enrollment procedures. Audit testing will increasingly focus on whether employee elections, default rates, and escalation provisions are being applied correctly.
Eligibility Tracking Is Becoming More Complex
SECURE 2.0 also expands eligibility requirements for long-term part-time employees.
As of 2025, employees who complete at least 500 hours of service in two consecutive years may need to be allowed into the plan. That change increases the importance of accurate employee census information and hours tracking.
For organizations with fluctuating staffing levels or multiple payroll systems, this can quickly become an administrative challenge if processes are not aligned.
Payroll Systems Matter More Than Ever
Several SECURE 2.0 provisions now rely heavily on payroll accuracy.
One example is the phased implementation of Roth catch-up contribution requirements for certain higher-income employees. Employers need to ensure payroll systems can properly distinguish between pre-tax and Roth contribution types.
At the same time, optional provisions—such as student loan matching contributions or expanded Roth features—may create additional administrative complexity if adopted.
Even when these enhancements are voluntary, they still require operational consistency and clear documentation once implemented.
Optional Features Create Planning Opportunities
Not every SECURE 2.0 provision is mandatory. The law also introduced several optional enhancements that employers may choose to adopt based on workforce needs and benefit strategy.
These include:
- Student loan matching contributions
- Emergency savings account features
- Enhanced catch-up contributions for ages 60–63
- Expanded Roth contribution options
For some organizations, these changes may improve recruiting and retention efforts. For others, the added complexity may outweigh the benefit. Evaluating both the operational and compliance impact is important before making changes.
Preparing for the Next Audit Cycle
As audit procedures continue evolving, preparation becomes more important.
Plan sponsors should review:
- Payroll system capabilities
- Eligibility tracking procedures
- Coordination between internal teams and service providers
- Documentation supporting operational decisions
Even if plan amendments are still in progress, plans are generally expected to operate in accordance with current law. Taking a proactive approach now can help reduce surprises during the audit process later.
What Plan Sponsors Should Focus on Now
SECURE 2.0 continues to shift retirement plan compliance toward operational execution, not just documentation.
For organizations with employee benefit plan audits, the key question is no longer simply whether the plan document has been updated. Auditors increasingly want to see that the plan is functioning correctly in practice.
At Dugan + Lopatka, we help employers navigate evolving retirement plan requirements, strengthen internal processes, and prepare for increasingly detailed audit procedures. If your organization would like to review how these changes may impact your plan, contact us. Our team is here to help.