401(k) Audit Services in Albuquerque, NM. For Albuquerque, NM businesses offering their employees retirement plans, completing a 401(k) audit can feel like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan doesn't favor higher-paid employees, there are many factors to consider. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are a regulatory requirement. Our team will partner with you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Albuquerque, NM, or seeking to simplify a previously cumbersome process, we're here to make it as simple and stress-free as possible. You can ask for a meeting with a member of our advisor team, fill out our online form, or call us at 877-930-401(k) to get started.
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About 401(k) Audits
A 401(k) audit is an annual review mandated for Albuquerque, NM companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively participating in the plan, you still need an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan follows the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s overall financial health, ensuring that employee contributions, withdrawals, and operations are properly documented.
While necessary for compliance, 401(k) audits can be complicated and demanding. Correct Capital assists Albuquerque, NM businesses prepare for these audits by helping with document collection, ensuring comprehension of compliance testing, as well as other audit processes. With an experienced team in your corner, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Albuquerque, NM Companies?
You must undergo a 401(k) audit for multiple purposes, ensuring that retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan adheres to all legal requirements set by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or other aspects of plan management, enabling you to resolve these issues so they don't lead to penalties.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, a yearly filing that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions do not exceed IRS limits for the year, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Albuquerque, NM employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two primary types of 401(k) Audits that Albuquerque, NM employers might come across, depending on the size and complexity of their plan. These types of audits are determined by the structure of the retirement plan, as well as its investment and participant details.
- Full-Scope Audit: This is the most detailed audit mandated for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, which includes financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these pertain to plans with investments overseen by a qualified, regulated financial institution (such as a bank or insurance company). The employer may qualify for a limited-scope audit. In this type, the auditor does not need to audit the investment information certified by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a better alternative for some Albuquerque, NM businesses, as long as they meet the criteria.
The kind of audit your plan needs is determined by your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan is subject to and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Albuquerque, NM Employers
While 401(k) audits must be conducted to ensure compliance, they often present significant challenges for Albuquerque, NM employers, especially those managing larger plans. Here are some of the key pain points that companies deal with:
- Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to organize and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations is difficult. Compliance missteps can result in audit failures, penalties, and pricey amendments later on.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees demands thorough checks for compliance and can lead to additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit takes HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and diverting attention from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Failing to meet the submission date could cause penalties and create further issues for the company.
At Correct Capital, we understand these challenges and offer customized assistance to streamline the audit procedure in Albuquerque, NM. From assisting with document collection or ensuring compliance with regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Albuquerque, NM employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans enable different employers to join a single 401(k) plan, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup allows Albuquerque, NM businesses to distribute the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it a desirable option for Albuquerque, NM businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while ensuring regulatory compliance. Switching to these types of plans may be especially appealing to smaller businesses in Albuquerque, NM, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Albuquerque, NM 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance can greatly improve the process. Partnering with professionals that understands both the technical and practical aspects of the audit process reduces the time and pressure you face. Here’s why working with the right specialists is crucial:
- Experience and Expertise: A skilled team is knowledgeable about the nuances of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to identify the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, with more than $212 million in total plan assets across the United States, giving us the expertise to handle any company 401(k) plan.
- Saving Time and Resources: Getting ready for a 401(k) audit can distract you significantly from day-to-day operations. The ideal support will handle most of the administrative tasks, giving your HR and finance teams the freedom to concentrate on other tasks. Correct Capital makes the process smoother, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an individual plan audit is no longer necessary, you're still responsible for following all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Albuquerque, NM runs efficiently and stress-free. With Correct Capital as your partner, you’ll feel secure that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Albuquerque, NM
Complying with 401(k) audits is both a regulatory obligation and an opportunity to verify your Albuquerque, NM company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s knowledge of helping Albuquerque, NM businesses complete the 401(k) audit lightens the load, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and we'll guide you get ready for a streamlined, effective audit. Our team of experts will support you with everything, including document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Albuquerque, NM advisor team, contact us online, or call us at 877-930-401(k) to begin.
