401(k) Audit Services in Elk Grove, CA. For Elk Grove, CA businesses offering their employees retirement plans, completing a 401(k) audit can seem like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit does not need to disrupt your business and affect your daily business activities.
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 partner with you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Elk Grove, CA, or looking to streamline a process that's usually a burden, we're here to ensure it’s as smooth and easy 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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About 401(k) Audits
A 401(k) audit is an yearly review necessary for Elk Grove, CA companies with 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 are eligible. The audit verifies that the retirement plan adheres to 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 plan activities are faithfully recorded.
While necessary to meet legal requirements, 401(k) audits can be complicated and lengthy. Correct Capital helps Elk Grove, CA businesses get ready for these audits by aiding in document collection, ensuring comprehension of compliance testing, as well as other audit processes. With an experienced team in your corner, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Elk Grove, CA Companies?
You need to undergo a 401(k) audit for a variety of reasons, ensuring that 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: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements set by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, withdrawals, or other facets of plan oversight, enabling you to resolve these issues before they result in penalties.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, an annual report detailing 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 contribution limits, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. High fees can raise compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Elk Grove, CA 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 in compliance with regulatory guidelines is a vital part of the audit.
Types of 401(k) Audits
There are two primary types of 401(k) Audits that Elk Grove, CA employers may encounter, depending on the size and complexity 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 necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components of the plan, including financial statements, compliance with 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: Formerly known as a "Limited Scope Audit," these pertain to plans with investments held 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 certified by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a preferable choice for some Elk Grove, CA businesses, provided they meet the criteria.
The specific audit required is based on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we will guide you to determine which type of audit your plan is subject to and help you be well-prepared for both audit types.
401(k) Audit Pain Points for Elk Grove, CA Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Elk Grove, CA employers, especially those overseeing more substantial retirement plans. Below are several common challenges that businesses face:
- Document Collection and Management: Collecting the right documents, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to arrange and deliver the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can cause audit failures, penalties, and costly corrections in the long run.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy 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 away from their core responsibilities, heightening pressure and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Failing to meet the submission date may lead to penalties and complicate things for the company.
At Correct Capital, we understand these challenges and deliver personalized help to streamline the audit procedure in Elk Grove, CA. Whether it’s helping 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 Elk Grove, CA employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. These plans allow unrelated employers to join a single 401(k) plan, reducing the need for 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 allows Elk Grove, CA businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to enter a unified 401(k) plan administered by a pooled plan provider (PPP). This structure simplifies compliance and lowers expenses, making it a desirable option for Elk Grove, CA businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while still ensuring compliance with federal regulations. Switching to these types of plans may be highly beneficial for smaller firms in Elk Grove, CA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Elk Grove, CA 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can greatly improve the process. Working with a team that is well-versed in both the technicalities and practicalities of the audit process reduces the time and pressure you face. Here’s why partnering with the right experts matters:
- Experience and Expertise: A team of experts understands the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We will assist you with the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to understand 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: Audit preparation can consume a lot of time from day-to-day operations. The right partner will shoulder a lot of the admin work, giving your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, easing the load for 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, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Elk Grove, CA runs efficiently and stress-free. With Correct Capital by your side, you’ll have the confidence that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Elk Grove, CA
Complying with 401(k) audits is both a legal requirement and an important way to confirm your Elk Grove, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Elk Grove, CA businesses through the 401(k) audit helps ease the burden, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will support you with everything, including document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Elk Grove, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.