401(k) Audit Services in Dayton, OH. For Dayton, OH businesses offering their employees retirement plans, navigating a 401(k) audit can seem like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't favor higher-paid employees, it can be overwhelming. 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 be a major source of stress even though they cannot be avoided. Our team will assist you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're navigating your first audit in Dayton, OH, or looking to streamline a process that's usually a burden, we're here to minimize the hassle. You can ask for 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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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 required for Dayton, OH 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 are still required to have an audit if there are 100 who are eligible. The audit ensures that the retirement plan complies with the regulations set 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, withdrawals, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complicated and demanding. Correct Capital helps Dayton, OH businesses get ready for these audits by helping with document collection, helping clarify compliance testing, etc... With an experienced team by your side, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Dayton, OH Companies?
You need to undergo a 401(k) audit for multiple purposes, ensuring that retirement plans remain compliant with federal regulations and safeguard both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements established by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan does not unfairly favor higher-paid employees (often called “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, withdrawals, or other facets of plan oversight, allowing you to correct these issues before they result in penalties.
- Filing Form 5500: The audit confirms 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 stay within IRS contribution limits, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Dayton, OH employers are serving the interests 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 in compliance with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Dayton, OH employers could face, depending on the size and complexity 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 external auditor evaluates all components of the plan, such as financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, distributions, 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 are for plans with investments managed 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 does not need to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a better alternative for some Dayton, OH businesses, if they satisfy the criteria.
The type of audit you need is determined by your plan’s specific details, such as the nature of its investments. At Correct Capital, we can help you figure out which type of audit your plan requires and help you be well-prepared for either process.
401(k) Audit Pain Points for Dayton, OH Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Dayton, OH employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that companies deal with:
- Document Collection and Management: Collecting the right documents, 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: Keeping pace with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can result in audit failures, fines, and costly corrections later on.
- Discrimination Testing: Making sure that the plan isn’t top-heavy demands thorough checks for compliance and can result in 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 regular business activities.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is essential to 401(k) compliance. Late submissions may lead to penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and deliver personalized help to make the audit process in Dayton, OH smoother. 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 Dayton, OH employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans enable different employers to participate in a unified 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 Dayton, OH businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs allow unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it appealing for Dayton, OH businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Transitioning into an MEP or PEP may be highly beneficial for smaller firms in Dayton, OH, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Dayton, OH 401(k) Audit Team
401(k) audits can be daunting, but selecting the proper assistance can make all the difference. Working with a team that has a firm grasp of both technical and practical elements of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A highly experienced group will be familiar with the nuances of 401(k) audits, covering both full-scope and limited-scope audits. We can guide you through the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to understand the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital handles more than 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: Audit preparation can distract you significantly from day-to-day operations. The ideal support will take on much of the administrative burden, allowing your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, 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 no longer necessary, 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
Working with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Dayton, OH runs efficiently and stress-free. With Correct Capital as your partner, you’ll feel secure that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Dayton, OH
Adhering to 401(k) audit regulations is both a regulatory obligation and an important way to confirm your Dayton, OH company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Dayton, OH businesses complete the 401(k) audit lightens the load, enabling you to concentrate on your operations while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to arrange a session and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will assist with everything from document collection to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Dayton, OH advisor team, contact us online, or call us at 877-930-401(k) to get started.