401(k) Audit Services in Eugene, OR. For Eugene, OR 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 is a lot to keep track of. However, with the right support, the 401(k) audit can be made much easier and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration and cannot be avoided. Our team will assist you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Eugene, OR, or hoping to optimize a previously inefficient process, we're here to make it as simple and stress-free as possible. 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.
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About 401(k) Audits
A 401(k) audit is an yearly review necessary for Eugene, OR companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively contributing to the plan, you must still undergo 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 evaluates the plan’s financial integrity, ensuring that employee contributions, distributions, and plan activities are properly documented.
While necessary for compliance, 401(k) audits can be challenging and lengthy. Correct Capital helps Eugene, OR businesses get ready for these audits by aiding in document collection, assisting with understanding compliance testing, and other related tasks. With an experienced team in your corner, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Eugene, OR Companies?
You need to undergo a 401(k) audit for several reasons, ensuring that retirement plans stay in line with federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan follows 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 checks if the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover 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 proper and timely submission 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 confirms that employer and employee contributions do not exceed IRS contribution limits, preventing excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and not overly expensive for participants. Excessive fees may prompt compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Eugene, OR employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is a critical part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Eugene, OR employers might come across, based on the specific details 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 most detailed audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, which includes financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, distributions, and other transactions to verify that everything is accurate and in 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 is not required to audit the investment information verified by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a preferable choice for some Eugene, OR businesses, if they satisfy the criteria.
The kind of audit your plan needs depends on your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we will guide you to determine which type of audit your plan requires and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Eugene, OR Employers
While 401(k) audits are necessary for compliance, they often present significant challenges for Eugene, OR employers, particularly those managing larger plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Collecting the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to sort through and file the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations is difficult. Compliance missteps can result in audit failures, fines, and expensive fixes in the long run.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit draws HR professionals, business owners, administrators, and others out of their core responsibilities, adding strain and shifting focus 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 can result in penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and offer customized assistance to make the audit process in Eugene, OR 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 Eugene, OR employers hoping to ease the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can provide solutions. These plans enable different employers to participate in a unified 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup enables Eugene, OR businesses to share the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it a desirable option for Eugene, OR businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Switching to these types of plans may be highly beneficial for smaller firms in Eugene, OR, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Eugene, OR 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can greatly improve the process. Partnering with professionals that understands both the technical and practical aspects 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 complexities of 401(k) audits, encompassing full-scope and limited-scope audits. We will assist you with 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, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. An experienced team will collaborate with you to grasp the unique needs of your plan and help you prepare 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Preparing for a 401(k) audit can take considerable time away from day-to-day operations. The ideal support will shoulder a lot of the admin work, enabling your HR and finance teams the freedom to concentrate on other tasks. Correct Capital makes the process smoother, 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 separate audit is not required, 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 well-informed, reliable team is essential to making sure your 401(k) audit in Eugene, OR goes as smoothly as possible. With Correct Capital supporting you, you’ll have the confidence that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Eugene, OR
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to ensure your Eugene, OR company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Eugene, OR businesses complete the 401(k) audit helps ease the burden, enabling you to concentrate on your operations while avoiding fines 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 assist with everything from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Eugene, OR advisor team, contact us online, or call us at 877-930-401(k) to begin.
