401(k) Audit Services in Chattanooga, TN. For Chattanooga, TN businesses offering their employees retirement plans, completing a 401(k) audit can seem like a daunting task. Between regulation from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan isn’t “top-heavy”, there are many factors to consider. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress and are a regulatory requirement. 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 Chattanooga, TN, or hoping to optimize a process that's usually a burden, we're here to make it as simple and stress-free as possible. 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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About 401(k) Audits
A 401(k) audit is an yearly review mandated for Chattanooga, TN companies who have 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 are still required to have an audit if there are 100 who have the option to participate if they wanted. The audit confirms that the retirement plan adheres to the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that employee contributions, withdrawals, and operations are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be complicated and demanding. Correct Capital assists Chattanooga, TN businesses navigate these audits by helping with document collection, helping clarify compliance testing, as well as other audit processes. With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Chattanooga, TN Companies?
You must undergo a 401(k) audit for a variety of reasons, to ensure retirement plans stay in line with federal regulations and safeguard 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, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan does not unfairly favor higher-paid employees (often referred to as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or additional plan operations, allowing you to correct these issues so they don't lead to penalties.
- 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 confirms that employer and employee contributions do not exceed IRS limits for the year, reducing the risk of excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. High fees can raise compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Chattanooga, TN 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 aligned with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Chattanooga, TN employers could face, based on the specific details of their plan. These types of audits are determined by the structure of the retirement plan, as well as its investment and participant details.
- Full-Scope Audit: This is the thorough audit necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor examines every part of the plan, including financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, withdrawls, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these apply to 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 does not need to audit the investment information certified by the financial institution, which can greatly lessen the audit’s complexity and cost. This may make it a preferable choice for some Chattanooga, TN businesses, as long as they meet the criteria.
The type of audit you need depends on your plan’s unique features, such as the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan requires and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Chattanooga, TN Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Chattanooga, TN employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers frequently have difficulties to sort through and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can cause audit failures, sanctions, and pricey amendments in the long run.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees requires careful compliance checks and can lead to additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit takes HR professionals, business owners, administrators, and others out 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 properly and punctually, which plays a critical role in 401(k) compliance. Missing the deadline can result in 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 Chattanooga, TN. Whether it’s helping 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 Chattanooga, TN 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 allow unrelated employers to participate in a unified 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 Chattanooga, TN businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it appealing for Chattanooga, TN businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Switching to these types of plans may be highly beneficial for smaller firms in Chattanooga, TN, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Chattanooga, TN 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Collaborating with experts 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 will be familiar with the nuances of 401(k) audits, encompassing 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 will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
- 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 help you prepare for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, with more than $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: Preparing for a 401(k) audit can distract you significantly from day-to-day operations. The ideal support will take on much of the administrative burden, giving your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, reducing the pressure on 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 no longer mandated, 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
Partnering with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Chattanooga, TN runs efficiently and stress-free. With Correct Capital by your side, you’ll feel secure that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Chattanooga, TN
Meeting 401(k) audit requirements is both a mandatory process and an opportunity to verify your Chattanooga, TN company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s knowledge of helping Chattanooga, TN businesses complete 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 we'll guide you prepare for a smooth, efficient 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 Chattanooga, TN advisor team, contact us online, or call us at 877-930-401(k) to start the process.