401(k) Audit Services in Boston, MA. For Boston, MA businesses that offer retirement plans, completing a 401(k) audit can seem like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, there are many factors to consider. However, with the right support, the 401(k) audit does not need to disrupt your business and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. Our team will partner with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Boston, MA, or seeking to simplify a process that's usually a burden, we're here to ensure it’s as smooth and easy as possible. You can schedule 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.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
More From Correct Capital Wealth Management
Explore how Correct Capital Wealth Management can help guide you toward smarter decisions, clearer goals, and lasting financial success.
Subscribe To Our Newsletter Listen To Our Podcast Watch Our YouTube Channel
About 401(k) Audits
A 401(k) audit is an yearly review required for Boston, MA companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively contributing to the plan, you are still required to have an audit if there are 100 who have the option to participate if they wanted. The audit verifies 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 necessary to meet legal requirements, 401(k) audits can be complicated and demanding. Correct Capital helps Boston, MA businesses prepare for these audits by helping with document collection, helping clarify compliance testing, and other related tasks. With an experienced team in your corner, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Boston, MA Companies?
You are required to undergo a 401(k) audit for multiple purposes, to ensure retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan complies with 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 checks if the plan does not unfairly favor higher-paid employees (often called “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or additional plan operations, providing an opportunity to fix these issues so they don't lead to fines.
- Filing Form 5500: The audit guarantees proper and timely submission of Form 5500, a required document summarizing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions do not exceed IRS contribution limits, helping to avoid excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and don’t pose an excessive cost for participants. High fees can raise compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Boston, MA employers are serving the interests of plan participants, satisfying their fiduciary responsibilities as mandated by 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 Boston, MA employers might come across, depending on factors such as the size and nature 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 thorough audit mandated for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, including 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 confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called a "Limited Scope Audit," these pertain to plans with investments managed by a qualified, regulated financial institution (such as a bank or insurance company). The employer may be eligible for a limited-scope audit. In this type, the auditor is not required to audit the investment information verified by the financial institution, which can substantially lower the audit’s complexity and cost. This could make it a better alternative for some Boston, MA businesses, provided they meet the criteria.
The type of audit you need is based on your plan’s specific details, including the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan needs and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Boston, MA Employers
While 401(k) audits are necessary for compliance, they often present significant challenges for Boston, MA employers, notably those managing larger plans. Here are some of the key pain points that companies deal with:
- Document Collection and Management: Collecting the right documents, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to arrange and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations is difficult. Compliance oversights can result in audit failures, sanctions, and costly corrections in the long run.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy requires careful compliance checks and can lead to additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others out of their core responsibilities, heightening pressure and diverting attention from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is a key component of 401(k) compliance. Missing the deadline could cause penalties and complicate things for the company.
At Correct Capital, we understand these challenges and provide tailored support to make the audit process in Boston, MA less stressful. Whether it’s helping 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 Boston, MA employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans permit various businesses to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup enables Boston, MA businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it attractive for Boston, MA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Switching to these types of plans may be especially appealing to smaller businesses in Boston, MA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Boston, MA 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can greatly improve the process. Collaborating with experts that understands both the technical and practical aspects of the audit process helps you avoid unnecessary delays and anxiety. Here’s why partnering with the right experts matters:
- Experience and Expertise: A team of experts understands the details of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to identify the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital handles more than 37 plans in both small and large companies, and represents over $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 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, 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 audit specific to your plan is no longer mandated, you're still obligated to adhere to all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Boston, MA goes as smoothly as possible. With Correct Capital supporting you, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Boston, MA
Complying with 401(k) audits is both a regulatory obligation and an opportunity to verify your Boston, MA company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Boston, MA businesses through the 401(k) audit reduces the strain, letting you prioritize your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Boston, MA advisor team, contact us online, or call us at 877-930-401(k) to begin.
