401(k) Audit Services in Irvine, CA. For Irvine, CA businesses offering their employees retirement plans, navigating a 401(k) audit can seem like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit does not need to disrupt your business and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. 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 preparing for your first audit in Irvine, 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.

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About 401(k) Audits
A 401(k) audit is an yearly review mandated for Irvine, 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 verifies that the retirement plan adheres to the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s overall financial health, ensuring that contributions, withdrawals, and operations are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be challenging and time-consuming. Correct Capital helps Irvine, CA businesses navigate these audits by helping with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team by your side, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Irvine, CA Companies?
You are required to undergo a 401(k) audit for a variety of reasons, 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 complies with 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) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in employee contributions, withdrawals, or other facets of plan oversight, allowing you to correct these issues so they don't lead to penalties.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a required document 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 limits for the year, preventing excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may examine plan fees to confirm they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Irvine, CA employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is a vital part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Irvine, CA employers could face, based on the specific details 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 necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components of the plan, including financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews 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 apply to plans with investments held by a qualified, regulated financial institution (such as a bank or insurance company). The employer may take advantage of a limited-scope audit. In this type, the auditor is not required to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This can make it a more attractive option for some Irvine, CA businesses, provided they meet the criteria.
The type of audit you need is determined by your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan needs and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for Irvine, CA Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Irvine, CA employers, particularly those overseeing more substantial retirement plans. These are some of the major issues that businesses face:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be time-consuming. Employers may find it challenging to sort through and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance errors can result in audit failures, penalties, and expensive fixes in the long run.
- Discrimination Testing: Verifying 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: Preparing for an audit pulls HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress 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 plays a critical role in 401(k) compliance. Failing to meet the submission date can result in penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and offer customized assistance to make the audit process in Irvine, CA more efficient. 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 Irvine, CA employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans allow unrelated employers to join a single 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 allows Irvine, CA 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 enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it appealing for Irvine, CA businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Moving to one of these plans may be particularly attractive for small companies in Irvine, CA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Irvine, CA 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Collaborating with experts 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 partnering with the right experts matters:
- Experience and Expertise: A skilled team understands 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 helps you remain up to date with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: All 401(k) plans are distinct. An experienced team will collaborate with you to grasp the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital handles more than 37 plans in both small and large companies, representing 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: Getting ready for a 401(k) audit can distract you significantly from day-to-day operations. The right partner will take on much of the administrative burden, giving your HR and finance teams to focus on other priorities. Correct Capital makes the process smoother, taking the stress off 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, just with less administrative burdens after plan year end.
*as of March 2024
Working with a experienced, reliable team is essential to making sure your 401(k) audit in Irvine, CA goes as smoothly as possible. With Correct Capital supporting you, 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 Irvine, CA
Complying with 401(k) audits is both a legal requirement and an important way to confirm your Irvine, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Irvine, CA businesses navigate the 401(k) audit lightens the load, letting you prioritize your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will assist with everything 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 Irvine, CA advisor team, contact us online, or call us at 877-930-401(k) to get started.