401(k) Audit Services in Cary, NC. For Cary, NC 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 isn’t “top-heavy”, there are many factors to consider. However, with the right support, the 401(k) audit can be made much easier and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration 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 navigating your first audit in Cary, NC, or seeking to simplify a previously inefficient process, we're here to minimize the hassle. 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.
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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 annual review required for Cary, NC companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively enrolled 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 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 contributions, distributions, and operations are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be complicated and demanding. Correct Capital supports Cary, NC businesses navigate these audits by aiding in document collection, ensuring comprehension of compliance testing, and other related tasks. With an experienced team in your corner, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Cary, NC Companies?
You need to 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 complies with all legal requirements mandated by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, distributions, or additional plan operations, allowing you to correct these issues to avoid fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a yearly filing detailing 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 remain within IRS limits for the year, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify 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 Cary, NC employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Verifying 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 main categories of 401(k) audits that Cary, NC 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 more comprehensive audit mandated for most larger 401(k) plans. In a full-scope audit, the third-party auditor reviews all aspects of the plan, including financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews 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 held 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 obligated to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a more attractive option for some Cary, NC businesses, if they satisfy the criteria.
The type of audit you need is determined by your plan’s specific details, including the nature of its investments. At Correct Capital, we can help you 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 Cary, NC Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Cary, NC employers, especially those managing larger plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be a lengthy process. Employers may find it challenging to arrange and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance missteps can result in audit failures, fines, and expensive fixes later on.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit takes HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and shifting focus from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Failing to meet the submission date can result in penalties and cause additional problems for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to streamline the audit procedure in Cary, NC. Be it 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 Cary, NC employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can ease the process. These plans permit various businesses to join a single 401(k) plan, frequently removing 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 enables Cary, NC businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it a desirable option for Cary, NC businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while still ensuring compliance with federal regulations. Transitioning into an MEP or PEP may be highly beneficial for smaller firms in Cary, NC, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Cary, NC 401(k) Audit Team
401(k) audits can seem difficult, 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 reduces the time and pressure you face. Here’s why having the right experts on your side is important:
- Experience and Expertise: A team of experts understands the complexities of 401(k) audits, including both full-scope and limited-scope audits. We will assist you with 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: All 401(k) plans are distinct. An experienced team will work closely with you to understand the unique needs of your plan and help you prepare 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The right partner will take on much of the administrative burden, allowing your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses participating 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, just with less administrative burdens after plan year end.
*as of March 2024
Working with a experienced, reliable team is essential to making sure your 401(k) audit in Cary, NC goes as smoothly as possible. With Correct Capital as your partner, you’ll have the confidence that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Cary, NC
Adhering to 401(k) audit regulations is both a mandatory process and an opportunity to ensure your Cary, NC company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Cary, NC 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 arrange a session and let us help you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Cary, NC advisor team, contact us online, or call us at 877-930-401(k) to get started.