401(k) Audit Services in Fort Collins, CO. For Fort Collins, CO 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, gathering a large amount of paperwork, and ensuring that your plan doesn't favor higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are a regulatory requirement. Our team will partner with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Fort Collins, CO, 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, 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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What is a 401(k) Audit?
A 401(k) audit is an annual review necessary for Fort Collins, CO companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t 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 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 reviews the plan’s overall financial health, ensuring that employee contributions, distributions, and operations are properly documented.
While required for regulatory purposes, 401(k) audits can be challenging and demanding. Correct Capital assists Fort Collins, CO businesses get ready for these audits by assisting with document collection, ensuring comprehension of compliance testing, as well as other audit processes. With the right support, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Fort Collins, CO Companies?
You are required to undergo a 401(k) audit for several reasons, 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: A 401(k) audit guarantees that your 401(k) plan complies with 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 checks if the plan isn't overly advantageous to higher-paid employees (often known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or additional plan operations, allowing you to correct these issues before they result in penalties.
- Filing Form 5500: The audit guarantees proper and timely submission of Form 5500, an annual report summarizing the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies 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 verify they are reasonable and not overly expensive for participants. Overpriced fees could lead to compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Fort Collins, CO employers are acting in the best interest of plan participants, fulfilling their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming 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 Fort Collins, CO employers could face, depending on factors such as the size and nature 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 more comprehensive audit mandated for most larger 401(k) plans. In a full-scope audit, the external 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 reviews supporting documentation for contributions, withdrawls, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously referred to as 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 qualify for 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 may make it a preferable choice for some Fort Collins, CO businesses, provided they meet the criteria.
The type of audit you need depends on your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan requires and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Fort Collins, CO Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Fort Collins, CO employers, notably those overseeing more substantial retirement plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to arrange and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can result in audit failures, sanctions, and expensive fixes in the long run.
- Discrimination Testing: Making sure that the plan isn’t top-heavy requires careful compliance checks and can necessitate additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others out of their core responsibilities, heightening pressure and shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they 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 recognize these obstacles and offer customized assistance to make the audit process in Fort Collins, CO 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 Fort Collins, CO employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can provide solutions. These plans allow unrelated employers to participate in a unified 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, reducing the cost and complexity of managing and auditing individual plans. This setup enables Fort Collins, CO businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it appealing for Fort Collins, CO businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be particularly attractive for small companies in Fort Collins, CO, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Fort Collins, CO 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can make all the difference. Collaborating with experts that understands both the technical and practical aspects of the audit process can save you significant time and stress. 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 can guide you through the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will partner with you to understand the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, with more than $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: Audit preparation can consume a lot of time from day-to-day operations. The right partner will take on much of the administrative burden, allowing your HR and finance teams to focus on other priorities. Correct Capital helps streamline the process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an individual plan audit is no longer mandated, 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
Working with a experienced, reliable team is essential to making sure your 401(k) audit in Fort Collins, CO goes as smoothly as possible. With Correct Capital supporting you, 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 Fort Collins, CO
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to ensure your Fort Collins, CO company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s expertise in guiding Fort Collins, CO 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 arrange a session and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will help with all aspects from document collection through to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Fort Collins, CO advisor team, contact us online, or call us at 877-930-401(k) to get started.
