401(k) Audit Services in Corona, CA. For Corona, CA 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, 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 doesn’t have to feel like a burden and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they cannot be avoided. Our team will work with you for everything from document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Corona, CA, or hoping to optimize a previously cumbersome process, we're here to minimize the hassle. You can book 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.
Schedule a Meeting With an Advisor Today
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.
Schedule a 15-Minute Introductory Call
About 401(k) Audits
A 401(k) audit is an yearly review required for Corona, CA companies who have more than 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 are eligible. The audit confirms that the retirement plan follows the regulations set 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, distributions, and operations are properly documented.
While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital supports Corona, CA businesses get ready for 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 Corona, CA 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: A 401(k) audit guarantees that your 401(k) plan adheres to all legal requirements established 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 isn't overly advantageous to higher-paid employees (often known as “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, distributions, or additional plan operations, providing an opportunity to fix these issues to avoid penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, an annual report summarizing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions remain within 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. Excessive fees may prompt compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Corona, CA employers are serving the interests of plan participants, meeting 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 critical part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Corona, CA employers may encounter, 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 most detailed audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, such as 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 ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Previously called 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 is not obligated to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a better alternative for some Corona, CA businesses, provided they meet the criteria.
The kind of audit your plan needs depends on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan needs and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Corona, CA Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Corona, CA employers, notably those managing larger plans. These are some of the major issues that employers encounter:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be a lengthy process. Employers often struggle to sort through and deliver the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations is difficult. Compliance oversights can lead to audit failures, penalties, and expensive fixes in the long run.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees demands thorough checks for compliance and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and shifting focus from regular business activities.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which plays a critical role in 401(k) compliance. Late submissions can result in penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to make the audit process in Corona, CA less stressful. Be it document collection or confirming conformity 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 Corona, CA employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans enable different employers to join a single 401(k) plan, often eliminating 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 enables Corona, CA businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs permit unrelated employers to enter a unified 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it attractive for Corona, CA businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Switching to these types of plans may be especially appealing to smaller businesses in Corona, CA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Corona, CA 401(k) Audit Team
401(k) audits can be daunting, 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 details of 401(k) audits, encompassing full-scope and limited-scope audits. We help you navigate 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, ensuring that your plan meets all necessary standards.
- Tailored Support: All 401(k) plans are distinct. An experienced team will collaborate with you to identify the unique needs of your plan and guide you in preparing 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, 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 right partner will handle most of the administrative tasks, 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 enrolled in an MEP or PEP, while an audit specific to your plan is no longer necessary, you're still responsible for following all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Partnering with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Corona, CA is as painless 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 Corona, CA
Adhering to 401(k) audit regulations is both a regulatory obligation and an opportunity to verify your Corona, CA company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Corona, CA businesses complete the 401(k) audit lightens the load, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you ensure your audit goes smoothly and efficiently. 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 Corona, CA advisor team, contact us online, or call us at 877-930-401(k) to begin.