401(k) Audit Services in Charlotte, NC. For Charlotte, NC businesses that offer retirement plans, navigating a 401(k) audit can feel like an uphill battle. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, 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 does not need to disrupt your business and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration and cannot be avoided. Our team will partner with you for everything from document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Charlotte, NC, or hoping to optimize a previously cumbersome process, we're here to make it as simple and stress-free as possible. 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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What is a 401(k) Audit?
A 401(k) audit is an yearly review required for Charlotte, NC companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled in the plan, you still need an audit if there are 100 who have the option to participate if they wanted. The audit verifies that the retirement plan follows the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s financial integrity, ensuring that employee contributions, distributions, and plan activities are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be challenging and time-consuming. Correct Capital supports Charlotte, NC businesses navigate these audits by helping with document collection, ensuring comprehension of compliance testing, as well as other audit processes. With the right support, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Charlotte, NC Companies?
You are required to undergo a 401(k) audit for several reasons, to ensure retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan complies with all legal requirements mandated 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) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in employee contributions, withdrawals, or other aspects of plan management, providing an opportunity to fix these issues before they result in penalties.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a yearly filing that outlines the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions remain within IRS limits for the year, reducing the risk of excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and aren’t unnecessarily high for participants. High fees can raise compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Charlotte, NC employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Ensuring 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 primary types of 401(k) Audits that Charlotte, NC employers might come across, 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 mandated for most larger 401(k) plans. In a full-scope audit, the external auditor evaluates all components of the plan, including financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, withdrawls, 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 apply to plans with investments overseen 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 does not need 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 more attractive option for some Charlotte, NC businesses, provided they meet the criteria.
The kind of audit your plan needs depends on your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we can help you determine which type of audit your plan is subject to and make sure you're ready for both audit types.
401(k) Audit Pain Points for Charlotte, NC Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Charlotte, NC employers, notably those offering bigger 401(k) plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers frequently have difficulties to sort through and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance errors can cause audit failures, sanctions, and expensive fixes down the line.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing 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 have difficulty with file Form 5500 properly and punctually, which is essential to 401(k) compliance. Missing the deadline may lead to penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to streamline the audit procedure in Charlotte, NC. From assisting with 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 Charlotte, NC employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans allow unrelated employers to consolidate into one 401(k) plan, reducing the need for 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 permits Charlotte, NC businesses to distribute the administrative responsibilities and potentially avoid 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 lowers expenses, making it appealing for Charlotte, NC businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while ensuring regulatory compliance. Moving to one of these plans may be highly beneficial for smaller firms in Charlotte, NC, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Charlotte, NC 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support changes everything. Collaborating with experts that understands both the technical and practical aspects 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 understands the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to grasp the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital currently manages over 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 consume a lot of time from day-to-day operations. The right partner will handle most of the administrative tasks, 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 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 experienced, reliable team is key to ensuring your 401(k) audit in Charlotte, NC is as painless 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 Charlotte, NC
Complying with 401(k) audits is both a legal requirement and an opportunity to verify your Charlotte, NC company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Charlotte, NC businesses complete the 401(k) audit helps ease the burden, letting you prioritize your business while preventing penalties for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you get ready for a streamlined, effective audit. Our team of experts will help with all aspects from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Charlotte, NC advisor team, contact us online, or call us at 877-930-401(k) to begin.
