401(k) Audit Services in Chandler, AZ. For Chandler, AZ businesses that offer 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, there are many factors to consider. 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 create significant headaches even though they are a regulatory requirement. Our team will partner with you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Chandler, AZ, or looking to streamline 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.
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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 annual review mandated for Chandler, AZ companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you lack 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 mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that contributions, distributions, and operations are faithfully recorded.
While necessary for compliance, 401(k) audits can be complicated and lengthy. Correct Capital helps Chandler, AZ businesses navigate these audits by assisting with document collection, helping clarify compliance testing, etc... With the right support, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Chandler, AZ Companies?
You must undergo a 401(k) audit for a variety of reasons, 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: A 401(k) audit guarantees that your 401(k) plan adheres to 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 does not unfairly favor higher-paid employees (often called “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or additional plan operations, providing an opportunity to fix these issues before they result in penalties.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, an annual report that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS contribution limits, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Chandler, AZ employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is a vital part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Chandler, AZ 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 reviews all aspects of the plan, which includes financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, distributions, and other transactions to ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these are for plans with investments managed 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 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 preferable choice for some Chandler, AZ businesses, if they satisfy the criteria.
The specific audit required depends on your plan’s unique features, like the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan needs and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Chandler, AZ Employers
While 401(k) audits are necessary for compliance, they often present significant challenges for Chandler, AZ 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 labor-intensive. Employers may find it challenging to sort through and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can result in audit failures, fines, and costly corrections later on.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy requires careful compliance checks and can necessitate additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and distracting them from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 accurately and on time, which plays a critical role in 401(k) compliance. Missing the deadline may lead to 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 Chandler, AZ. From assisting with document collection or ensuring compliance with 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 Chandler, AZ employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans permit various businesses to join a single 401(k) plan, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Chandler, AZ businesses to share the administrative responsibilities and potentially avoid 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 streamlines the regulatory process and lowers expenses, making it appealing for Chandler, AZ businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while ensuring regulatory compliance. Switching to these types of plans may be highly beneficial for smaller firms in Chandler, AZ, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Chandler, AZ 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can greatly improve the process. Partnering with professionals that is well-versed in both the technicalities and practicalities of the audit process can save you significant time and stress. Here’s why working with the right specialists is crucial:
- Experience and Expertise: A highly experienced group is knowledgeable about the details of 401(k) audits, including both full-scope and limited-scope audits. We can guide you through the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: All 401(k) plans are distinct. An experienced team will collaborate with you to grasp 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, representing over $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: Audit preparation can distract you significantly from day-to-day operations. The ideal support will handle most of the administrative tasks, enabling your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an individual plan audit is no longer mandated, you're still required to comply with all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Working with a well-informed, reliable team is key to ensuring your 401(k) audit in Chandler, AZ goes as smoothly as possible. With Correct Capital by your side, 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 Chandler, AZ
Complying with 401(k) audits is both a mandatory process and an opportunity to ensure your Chandler, AZ company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Chandler, AZ businesses through the 401(k) audit reduces the strain, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will help with all aspects from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Chandler, AZ advisor team, contact us online, or call us at 877-930-401(k) to get started.
