401(k) Audit Services in Bakersfield, CA. For Bakersfield, CA businesses offering their employees retirement plans, navigating a 401(k) audit can feel like a daunting task. 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, it can be overwhelming. However, with the right support, the 401(k) audit can be made much easier and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they cannot be avoided. Our team will assist you for everything from document collection through meeting Form 5500 deadlines. Whether you're navigating your first audit in Bakersfield, CA, or looking to streamline a process that's usually a burden, we're here to minimize the hassle. 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 yearly review required for Bakersfield, CA companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you must still undergo an audit if there are 100 who have the option to participate if they wanted. The audit confirms that the retirement plan adheres to the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that employee contributions, distributions, and operations are accurately represented.
While required for regulatory purposes, 401(k) audits can be challenging and lengthy. Correct Capital supports Bakersfield, CA businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, etc... With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Bakersfield, CA Companies?
You are required to undergo a 401(k) audit for several reasons, to ensure retirement plans stay in line with federal regulations and safeguard both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan adheres to all legal requirements set by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other aspects of plan management, allowing you to correct these issues to avoid fines.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a yearly filing detailing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions remain within IRS limits for the year, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Bakersfield, CA employers are working to benefit plan participants, fulfilling their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Bakersfield, CA employers may encounter, depending on the size and complexity of their plan. The audit type typically depends on the number of participants and the complexity of the investments in the plan.
- Full-Scope Audit: This is the thorough audit required for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components of the plan, such as financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, withdrawls, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called 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 take advantage of a limited-scope audit. In this type, the auditor is not required to audit the investment information certified by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a more attractive option for some Bakersfield, CA businesses, provided they meet the criteria.
The specific audit required is based on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan is subject to and make sure you're ready for either process.
401(k) Audit Pain Points for Bakersfield, CA Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Bakersfield, CA employers, notably those overseeing more substantial retirement plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to arrange and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can cause audit failures, fines, and expensive fixes in the long run.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit draws HR professionals, business owners, administrators, and others off of their core responsibilities, heightening pressure and diverting attention from everyday business tasks.
- 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. Missing the deadline can result in penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and provide tailored support to streamline the audit procedure in Bakersfield, CA. Be it document collection or verifying adherence to regulations, our team takes on much of the work for you.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Bakersfield, CA employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. These plans permit various businesses to consolidate into one 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Bakersfield, CA businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and reduces costs, making it attractive for Bakersfield, CA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Switching to these types of plans may be highly beneficial for smaller firms in Bakersfield, CA, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Bakersfield, CA 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Collaborating with experts that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A highly experienced group understands the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We can guide you through the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to understand the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital handles more than 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: Audit preparation can distract you significantly from day-to-day operations. The proper team 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, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an separate audit is not required, you're still required to comply with all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Bakersfield, CA runs efficiently and stress-free. With Correct Capital supporting you, you’ll feel secure that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Bakersfield, CA
Adhering to 401(k) audit regulations is both a legal requirement and an important way to confirm your Bakersfield, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Bakersfield, CA businesses through the 401(k) audit helps ease the burden, allowing you to focus on your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and allow us to assist you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects from document collection through to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Bakersfield, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.