401(k) Audit Services in Denver, CO. For Denver, CO businesses offering their employees retirement plans, navigating 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 doesn't favor higher-paid employees, there is a lot to keep track of. 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 create significant headaches even though they are mandatory. Our team will assist you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Denver, CO, or looking to streamline 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.
About 401(k) Audits
A 401(k) audit is an yearly review required for Denver, CO 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 participating 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 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, withdrawals, and operations are properly documented.
While necessary to meet legal requirements, 401(k) audits can be challenging and lengthy. Correct Capital supports Denver, CO businesses navigate these audits by helping with document collection, assisting with understanding 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 Denver, CO Companies?
You must undergo a 401(k) audit for multiple purposes, to ensure retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm 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) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, distributions, or other facets of plan oversight, enabling you to resolve these issues before they result in fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a required document 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 remain within IRS contribution limits, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to verify they are reasonable and don’t pose an excessive cost for participants. High fees can raise compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Denver, CO employers are acting in the best interest 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 kinds of 401(k) audits that Denver, CO employers might come across, depending on factors such as the size and nature 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 more comprehensive audit necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor reviews all aspects of the plan, such as financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines 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 are for 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 is not required to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This can make it a more attractive option for some Denver, CO businesses, provided they meet the criteria.
The type of audit you need is based on your plan’s particular characteristics, including 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 both audit types.
401(k) Audit Pain Points for Denver, CO Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Denver, CO employers, particularly those offering bigger 401(k) plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to arrange and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can cause audit failures, sanctions, and costly corrections down the line.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation draws HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which is essential to 401(k) compliance. Late submissions could cause penalties and complicate things for the company.
At Correct Capital, we understand these challenges and provide tailored support to streamline the audit procedure in Denver, CO. Whether it’s helping with document collection or ensuring compliance 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 Denver, CO employers hoping to ease the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans allow unrelated employers to consolidate into one 401(k) plan, often eliminating 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 permits Denver, CO businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to enter a unified 401(k) plan managed by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it a desirable option for Denver, CO businesses looking to streamline 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 especially appealing to smaller businesses in Denver, CO, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Denver, CO 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Working with a team 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 is knowledgeable about the complexities of 401(k) audits, including both full-scope and limited-scope audits. We can guide you through the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to identify 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, representing over $212 million in total plan assets across the United States, enabling us to understand the specifics of any company 401(k) plan.
- Saving Time and Resources: Preparing for a 401(k) audit can consume a lot of time from day-to-day operations. The right partner will shoulder a lot of the admin work, enabling your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an separate audit 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 Denver, CO is as painless as possible. With Correct Capital supporting you, you’ll be assured that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Denver, CO
Adhering to 401(k) audit regulations is both a mandatory process and an important way to confirm your Denver, CO company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Denver, CO businesses through the 401(k) audit reduces the strain, enabling you to concentrate on your operations while preventing penalties for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will assist with everything from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Denver, CO advisor team, contact us online, or call us at 877-930-401(k) to begin.
