401(k) Audit Services in Buffalo, NY. For Buffalo, NY businesses offering their employees retirement plans, navigating a 401(k) audit can seem like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't favor higher-paid employees, there is a lot to keep track of. 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 be a major source of stress even though they are a regulatory requirement. Our team will assist you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Buffalo, NY, or looking to streamline a previously cumbersome process, we're here to minimize the hassle. You can schedule a meeting with a member of our advisor team, contact us online, 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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What is a 401(k) Audit?
A 401(k) audit is an yearly review mandated for Buffalo, NY 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 still need an audit if there are 100 who are eligible. The audit verifies that the retirement plan adheres to the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s overall financial health, ensuring that contributions, withdrawals, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital assists Buffalo, NY businesses navigate these audits by aiding in document collection, assisting with understanding 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 Buffalo, NY Companies?
You need to undergo a 401(k) audit for several reasons, ensuring that retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm 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 verifies whether the plan does not unfairly favor higher-paid employees (often referred to as “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues before they result in fines.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a required document that outlines the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions do not exceed IRS limits for the year, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Buffalo, NY employers are serving the interests of plan participants, meeting their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are aligned 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 Buffalo, NY employers may encounter, based on the specific details 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 evaluates all components 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 confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these apply 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 verified by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a better alternative for some Buffalo, NY businesses, if they satisfy the criteria.
The specific audit required depends on your plan’s unique features, including the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan is subject to and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Buffalo, NY Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Buffalo, NY employers, particularly those managing larger plans. These are some of the major issues that employers encounter:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be a lengthy process. Employers may find it challenging to arrange and file the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations is difficult. Compliance errors can cause audit failures, sanctions, and expensive fixes in the long run.
- Discrimination Testing: Verifying that the plan isn’t top-heavy demands thorough checks for compliance and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation takes HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Missing the deadline could cause penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and offer customized assistance to streamline the audit procedure in Buffalo, NY. Be it document collection or verifying adherence to regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Buffalo, NY employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans permit various businesses to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup enables Buffalo, NY businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs enable unrelated employers to enter a unified 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it attractive for Buffalo, NY businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Buffalo, NY, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Buffalo, NY 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance changes everything. Partnering with professionals that has a firm grasp of both technical and practical elements 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 highly experienced group will be familiar with the complexities 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 ensures you keep up with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will work closely with you to understand 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, with more than $212 million in total plan assets across the United States, enabling us to understand the specifics of any company 401(k) plan.
- Saving Time and Resources: Audit preparation can take considerable time away from day-to-day operations. The right partner will shoulder a lot of the admin work, allowing your HR and finance teams to focus on other priorities. Correct Capital makes the process smoother, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is not required, you're still required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Collaborating with a well-informed, reliable team is essential to making sure your 401(k) audit in Buffalo, NY is as painless as possible. With Correct Capital by your side, you’ll have the confidence that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Buffalo, NY
Meeting 401(k) audit requirements is both a regulatory obligation and an important way to confirm your Buffalo, NY company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Buffalo, NY businesses navigate the 401(k) audit helps ease the burden, letting you prioritize your business while ensuring you're not penalized 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 to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Buffalo, NY advisor team, contact us online, or call us at 877-930-401(k) to get started.
