401(k) Audit Services in Bridgeport, CT. For Bridgeport, CT businesses that offer retirement plans, completing a 401(k) audit can seem like an uphill battle. Between regulation from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan isn’t “top-heavy”, there is a lot to keep track of. However, with the right support, the 401(k) audit can be made much easier and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches and cannot be avoided. Our team will partner with you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Bridgeport, CT, or seeking to simplify a previously inefficient process, 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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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.
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About 401(k) Audits
A 401(k) audit is an yearly review necessary for Bridgeport, CT companies with 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 are still required to have an audit if there are 100 who are eligible. The audit ensures that the retirement plan adheres to 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 accurately represented.
While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital helps Bridgeport, CT businesses prepare for these audits by aiding in document collection, assisting with understanding compliance testing, etc... With the right support, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Bridgeport, CT Companies?
You must undergo a 401(k) audit for multiple purposes, to ensure 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: Audits ensure that your 401(k) plan follows all legal requirements established 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 does not unfairly favor higher-paid employees (often known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in contributions, distributions, or other facets of plan oversight, enabling you to resolve these issues before they result in fines.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a yearly filing summarizing the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions do not exceed IRS contribution limits, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Bridgeport, CT employers are working to benefit plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring 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 main categories of 401(k) audits that Bridgeport, CT employers could face, 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 third-party auditor reviews all aspects of the plan, such as financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously called a "Limited Scope Audit," these are for plans with investments held 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 endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a more attractive option for some Bridgeport, CT businesses, if they satisfy the criteria.
The kind of audit your plan needs depends on your plan’s unique features, like the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan requires and help you be well-prepared for both audit types.
401(k) Audit Pain Points for Bridgeport, CT Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Bridgeport, CT employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Gathering the right documents, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to organize and deliver the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can result in audit failures, fines, and costly corrections down the line.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others off of their core responsibilities, adding strain and shifting focus from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which plays a critical role in 401(k) compliance. Failing to meet the submission date could cause penalties and cause additional problems for the company.
At Correct Capital, we recognize these obstacles and provide tailored support to streamline the audit procedure in Bridgeport, CT. Be it document collection or confirming conformity 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 Bridgeport, CT employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans allow unrelated employers to participate in a unified 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup enables Bridgeport, CT businesses to share the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs enable unrelated employers to join a shared 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it attractive for Bridgeport, CT businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Moving to one of these plans may be particularly attractive for small companies in Bridgeport, CT, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Bridgeport, CT 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place changes everything. Working with a team that is well-versed in both the technicalities and practicalities of the audit process can save you significant time and stress. Here’s why partnering with the right experts matters:
- Experience and Expertise: A highly experienced group is knowledgeable about the nuances of 401(k) audits, covering both 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 helps you remain up to date 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 identify the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, representing 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 consume a lot of time from day-to-day operations. The proper team will take on much of the administrative burden, enabling 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 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
Partnering with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Bridgeport, CT runs efficiently and stress-free. With Correct Capital by your side, 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 Bridgeport, CT
Meeting 401(k) audit requirements is both a mandatory process and an important way to confirm your Bridgeport, CT company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Bridgeport, CT businesses navigate the 401(k) audit lightens the load, letting you prioritize your business while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will assist with everything from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Bridgeport, CT advisor team, contact us online, or call us at 877-930-401(k) to get started.
