401(k) Audit Services in Glendale, CA. For Glendale, CA businesses offering their employees retirement plans, completing a 401(k) audit can feel like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, 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 cause considerable frustration even though they cannot be avoided. Our team will partner with you for everything from document collection to meeting Form 5500 deadlines. Whether you're navigating your first audit in Glendale, CA, or hoping to optimize a previously cumbersome process, we're here to ensure it’s as smooth and easy as possible. You can schedule 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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About 401(k) Audits
A 401(k) audit is an yearly review necessary for Glendale, CA companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively contributing to the plan, you still need an audit if there are 100 who are eligible. The audit ensures that the retirement plan complies with the regulations set by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s overall financial health, ensuring that contributions, withdrawals, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complicated and time-consuming. Correct Capital helps Glendale, CA businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, as well as other audit processes. With an experienced team by your side, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Glendale, CA Companies?
You are required to undergo a 401(k) audit for multiple purposes, ensuring that retirement plans remain compliant with federal regulations and safeguard both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan follows all legal requirements established by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan does not unfairly favor higher-paid employees (often known as “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- 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 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 verifies that employer and employee contributions do not exceed IRS limits for the year, preventing excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Glendale, CA employers are working to benefit plan participants, meeting their fiduciary responsibilities as outlined in 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 Glendale, CA employers could face, 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 more comprehensive audit necessary for most larger 401(k) plans. In a full-scope audit, the external auditor evaluates all components of the plan, such as financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called 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 does not need to audit the investment information verified by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a better alternative for some Glendale, CA businesses, as long as they meet the criteria.
The kind of audit your plan needs is determined by your plan’s unique features, like the nature of its investments. At Correct Capital, we can help you figure out which type of audit your plan is subject to and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for Glendale, CA Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Glendale, CA employers, notably those managing larger plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers often struggle to sort through and file the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations is difficult. Compliance errors can lead to audit failures, sanctions, and expensive fixes down the line.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees involves detailed compliance reviews and can lead to additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit pulls 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 correctly and before the deadline, which is essential to 401(k) compliance. Missing the deadline may lead to 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 Glendale, CA more efficient. Whether it’s helping with document collection or ensuring compliance 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 Glendale, CA employers hoping to ease the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can ease the process. These plans permit various businesses to consolidate into one 401(k) plan, reducing the need for 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 Glendale, CA businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs allow unrelated employers to join a shared 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it attractive for Glendale, CA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while still ensuring compliance with federal regulations. Switching to these types of plans may be especially appealing to smaller businesses in Glendale, CA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Glendale, CA 401(k) Audit Team
401(k) audits can appear challenging, 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 can save you significant time and stress. 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, including both full-scope and limited-scope audits. We can guide you through the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, ensuring that your plan meets all necessary standards.
- 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 assist you in getting ready for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, representing over $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: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The ideal support will take on much of the administrative burden, enabling your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, 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 obligated to adhere to all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Glendale, CA goes as smoothly as possible. With Correct Capital as your partner, you’ll feel secure that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Glendale, CA
Adhering to 401(k) audit regulations is both a regulatory obligation and an opportunity to ensure your Glendale, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Glendale, CA businesses complete 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 to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Glendale, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.