401(k) Audit Garden Grove, CA

Complimentary financial planning By Savology

401(k) Audit Services in Garden Grove, CA. For Garden Grove, CA businesses that offer retirement plans, navigating a 401(k) audit can seem like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, 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 doesn’t have to feel like a burden and disrupt your day-to-day operations.

At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they are mandatory. Our team will partner with you for everything from document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Garden Grove, CA, or seeking to simplify a previously cumbersome process, we're here to make it as simple and stress-free 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.


Schedule a Meeting With an Advisor Today

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.

Schedule a 15-Minute Introductory Call


What is a 401(k) Audit?

A 401(k) audit is an annual review necessary for Garden Grove, CA companies who have at least 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 ensures that the retirement plan follows 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 faithfully recorded.

While necessary for compliance, 401(k) audits can be challenging and lengthy. Correct Capital supports Garden Grove, CA businesses prepare for these audits by aiding in document collection, assisting with understanding compliance testing, etc... With an experienced team in your corner, navigating the audit can become a much easier process.

Why are 401(k) Audits Necessary for Garden Grove, CA Companies?

You need to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans adhere to federal regulations and protect 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 set 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 guarantee fairness across all participants.
  • Identifying Operational Issues: Audits often expose errors in employee contributions, distributions, or additional plan operations, enabling you to resolve these issues to avoid fines.
  • Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, an annual report that outlines 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, reducing the risk of excess contributions that might trigger penalties.
  • Fee Reasonableness: Auditors may evaluate plan fees to verify they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
  • Fiduciary Oversight: The audit ensures that Garden Grove, CA employers are serving the interests of plan participants, meeting their fiduciary responsibilities as required by ERISA.
  • Verification of Plan Documentation: Confirming 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 main categories of 401(k) audits that Garden Grove, CA employers could face, 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 thorough audit mandated for most larger 401(k) plans. In a full-scope audit, the external auditor examines every part of the plan, including financial statements, adherence to 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: Previously referred to as 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 be eligible for a limited-scope audit. In this type, the auditor is not obligated to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a preferable choice for some Garden Grove, CA businesses, as long as they meet the criteria.

The specific audit required depends on your plan’s unique features, like the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan requires and ensure you're fully prepared for either process.

401(k) Audit Pain Points for Garden Grove, CA Employers

While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Garden Grove, CA employers, notably those managing larger plans. Here are some of the key pain points that businesses face:

  • Document Collection and Management: Gathering the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers may find it challenging to sort through 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 be challenging. Compliance missteps can lead to audit failures, penalties, and expensive fixes later on.
  • Discrimination Testing: Making sure that the plan doesn't favor higher earning employees involves detailed compliance reviews and can necessitate additional documentation and reporting.
  • Time and Resource Demands: Getting ready for an audit draws HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and diverting attention from day-to-day operations.
  • Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Failing to meet the submission date could cause penalties and create further issues for the company.

At Correct Capital, we understand these challenges and provide tailored support to streamline the audit procedure in Garden Grove, CA. From assisting 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 Garden Grove, CA employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans allow unrelated employers to consolidate into one 401(k) plan, frequently removing 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 enables Garden Grove, CA 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 makes meeting regulations easier and lowers expenses, making it appealing for Garden 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 ensuring regulatory compliance. Transitioning into an MEP or PEP may be highly beneficial for smaller firms in Garden Grove, CA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.

Working with the Right Garden Grove, CA 401(k) Audit Team

401(k) audits can seem difficult, but selecting the proper assistance can greatly improve the process. Partnering with professionals that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why partnering with the right experts matters:

  • Experience and Expertise: A highly experienced group is knowledgeable about the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We help you navigate the documentation process and pinpoint potential improvements within your plan.
  • Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
  • Tailored Support: Each 401(k) plan has unique requirements. An experienced team will work closely with you to identify 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, and represents 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 distract you significantly from day-to-day operations. The right partner will shoulder a lot of the admin work, giving your HR and finance teams to focus on other priorities. 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 separate audit is no longer necessary, you're still required to comply with 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 crucial for guaranteeing your 401(k) audit in Garden Grove, CA goes as smoothly as possible. With Correct Capital as your partner, 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 Garden Grove, CA

Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to ensure your Garden Grove, CA company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Garden Grove, CA businesses through 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 book a meeting and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Garden Grove, CA advisor team, contact us online, or call us at 877-930-401(k) to begin.


Are you ready to experience the Correct Capital difference?

GET STARTED

Meet our team of financial advisors.

Our Team

Services We Offer