401(k) Audit Services in Hollywood, FL. For Hollywood, FL businesses that offer retirement plans, completing a 401(k) audit can feel like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, 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 create significant headaches and are a regulatory requirement. Our team will work with 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 Hollywood, FL, or hoping to optimize a previously cumbersome process, we're here to minimize the hassle. You can schedule 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 Hollywood, FL 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 still need an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan complies with the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that employee contributions, distributions, and plan activities are faithfully recorded.
While required for regulatory purposes, 401(k) audits can be challenging and demanding. Correct Capital supports Hollywood, FL businesses navigate these audits by assisting with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team in your corner, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Hollywood, FL 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 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, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan disproportionately benefits higher-paid employees (often referred to as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, withdrawals, or other aspects of plan management, allowing you to correct these issues before they result in fines.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, a yearly filing detailing the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions do not exceed IRS contribution limits, reducing the risk of excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify they are reasonable and aren’t unnecessarily high for participants. High fees can raise compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Hollywood, FL employers are serving the interests of plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Hollywood, FL employers could face, based on the specific details 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 independent auditor examines every part of the plan, such as financial statements, adherence to 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 referred to as a "Limited Scope Audit," these apply to plans with investments overseen 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 significantly reduce the audit’s complexity and cost. This can make it a preferable choice for some Hollywood, FL 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 will guide you to figure out which type of audit your plan is subject to and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Hollywood, FL Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Hollywood, FL employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to organize and file the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can result in audit failures, sanctions, and pricey amendments down the line.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit takes HR professionals, business owners, administrators, and others out of their core responsibilities, adding strain and diverting attention 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. Late submissions may lead to penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to make the audit process in Hollywood, FL smoother. Be it document collection or confirming conformity with 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 Hollywood, FL employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans allow unrelated 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 permits Hollywood, FL businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to participate in a collective 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and lowers expenses, making it attractive for Hollywood, FL businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Switching to these types of plans may be particularly attractive for small companies in Hollywood, FL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Hollywood, FL 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance can greatly improve the process. Working with a team that has a firm grasp of both technical and practical elements 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 is knowledgeable about the nuances 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 ensures you keep up with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to grasp the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, and represents 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: Audit preparation can distract you significantly from day-to-day operations. The ideal support will shoulder a lot of the admin work, allowing your HR and finance teams the ability to address other important matters. Correct Capital simplifies the entire process, 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 audit specific to your plan 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
Collaborating with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Hollywood, FL runs efficiently and stress-free. With Correct Capital as your partner, you’ll have the confidence that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Hollywood, FL
Complying with 401(k) audits is both a regulatory obligation and an opportunity to verify your Hollywood, FL company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Hollywood, FL businesses navigate 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 prepare for a smooth, efficient audit. Our team of experts will help with all aspects from document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Hollywood, FL advisor team, contact us online, or call us at 877-930-401(k) to begin.
