401(k) Audit Garland, TX

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401(k) Audit Services in Garland, TX. For Garland, TX businesses that offer retirement plans, completing 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 interfere with your company’s daily 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 assist you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're navigating your first audit in Garland, TX, or looking to streamline a previously inefficient process, 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, contact us online, or call us at 877-930-401(k) to get started.


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What is a 401(k) Audit?

A 401(k) audit is an annual review mandated for Garland, TX companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled 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 follows the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s overall financial health, ensuring that contributions, distributions, and operations are faithfully recorded.

While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital assists Garland, TX businesses navigate these audits by helping with document collection, ensuring comprehension of compliance testing, etc... With the right support, getting through the audit can become a much easier process.

Why are 401(k) Audits Necessary for Garland, TX Companies?

You must undergo a 401(k) audit for several reasons, ensuring that 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 adheres to all legal requirements set by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
  • Preventing Discrimination: The audit ensures that the plan isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) to guarantee fairness across all participants.
  • Identifying Operational Issues: Audits may reveal errors in contributions, withdrawals, or other aspects of plan management, providing an opportunity to fix these issues before they result in fines.
  • Filing Form 5500: The audit confirms 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 ensures that employer and employee contributions stay within IRS limits for the year, reducing the risk of excess contributions that might trigger penalties.
  • Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and affect how employees' investments and savings perform.
  • Fiduciary Oversight: The audit verifies that Garland, TX employers are acting in the best interest of plan participants, fulfilling 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 one of the most important parts of the audit.

Types of 401(k) Audits

There are two main categories of 401(k) audits that Garland, TX 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 thorough audit mandated for most larger 401(k) plans. In a full-scope audit, the external auditor evaluates all components of the plan, which includes financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates 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 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 certified by the financial institution, which can greatly lessen the audit’s complexity and cost. This may make it a more attractive option for some Garland, TX businesses, provided they meet the criteria.

The type of audit you need is determined by 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 needs and ensure you're fully prepared for both audit types.

401(k) Audit Pain Points for Garland, TX Employers

While 401(k) audits are required to meet legal obligations, they often present significant challenges for Garland, TX employers, especially those managing larger plans. Below are several common challenges that companies deal with:

  • Document Collection and Management: Gathering the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to sort through and file the necessary paperwork, especially for larger, more complex plans.
  • Compliance with Changing Regulations: Keeping pace with changing DOL, IRS, and ERISA regulations can be challenging. Compliance errors can cause audit failures, penalties, and expensive fixes down the line.
  • Discrimination Testing: Verifying that the plan doesn't favor higher earning employees demands thorough checks for compliance 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 diverting attention from regular business activities.
  • Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Late submissions may lead to penalties and cause additional problems for the company.

At Correct Capital, we recognize these obstacles and offer customized assistance to streamline the audit procedure in Garland, TX. From assisting with document collection or verifying adherence to regulations, our team takes on much of the work for you.

401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)

For Garland, TX employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans permit various businesses 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, reducing the cost and complexity of managing and auditing individual plans. This setup allows Garland, TX businesses to distribute the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to participate in a collective 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and cuts costs, making it attractive for Garland, TX businesses looking to streamline their retirement offerings.

Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Moving to one of these plans may be highly beneficial for smaller firms in Garland, TX, that want to provide a 401(k) but struggle with the costs and administrative burdens.

Working with the Right Garland, TX 401(k) Audit Team

401(k) audits can be daunting, but selecting the proper assistance can greatly improve the process. Collaborating with experts that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why working with the right specialists is crucial:

  • Experience and Expertise: A team of experts will be familiar with the details 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, ensuring that your plan meets all necessary standards.
  • Tailored Support: Each 401(k) plan has unique requirements. An experienced team will partner with you to identify 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, with more than $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 take considerable time away from day-to-day operations. The proper team will shoulder a lot of the admin work, enabling your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, easing the load for your internal team.
  • MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an individual plan audit is no longer necessary, you're still required to comply with all the rules and regulations, just with less administrative burdens after plan year end.

*as of March 2024

Working with a well-informed, reliable team is key to ensuring your 401(k) audit in Garland, TX goes as smoothly as possible. With Correct Capital by your side, 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 Garland, TX

Complying with 401(k) audits is both a legal requirement and an opportunity to ensure your Garland, TX company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s expertise in guiding Garland, TX businesses through the 401(k) audit reduces the strain, letting you prioritize your business while ensuring you're not penalized 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 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 Garland, TX advisor team, contact us online, or call us at 877-930-401(k) to get started.


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