401(k) Audit Services in Jacksonville, FL. For Jacksonville, FL businesses that offer retirement plans, navigating a 401(k) audit can seem like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan isn’t “top-heavy”, it can be overwhelming. However, with the right support, the 401(k) audit can be made much easier and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can be a major source of stress and cannot be avoided. Our team will work with you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Jacksonville, FL, or seeking to simplify a previously cumbersome process, we're here to minimize the hassle. 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 mandated for Jacksonville, FL 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 contributing to the plan, you must still undergo an audit if there are 100 who are eligible. The audit ensures that the retirement plan adheres to the regulations mandated 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, distributions, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complicated and demanding. Correct Capital assists Jacksonville, FL businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, etc... With an experienced team by your side, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Jacksonville, FL Companies?
You must undergo a 401(k) audit for a variety of reasons, to ensure retirement plans stay in line with federal regulations and protect both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan complies with all legal requirements set by the Department of Labor (DOL) and the IRS, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan does not unfairly favor 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, distributions, or additional plan operations, providing an opportunity to fix these issues to avoid penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, an annual report 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 remain within IRS limits for the year, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. High fees can raise compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit ensures that Jacksonville, FL employers are acting in the best interest of plan participants, fulfilling their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are consistent 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 Jacksonville, FL employers might come across, 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 thorough audit required for most larger 401(k) plans. In a full-scope audit, the independent auditor examines every part 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, 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 held 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 is not obligated to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This may make it a more attractive option for some Jacksonville, FL businesses, provided they meet the criteria.
The kind of audit your plan needs is based on 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 is subject to and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Jacksonville, FL Employers
While 401(k) audits must be conducted to ensure compliance, they often present significant challenges for Jacksonville, FL employers, notably those running bigger 401(k) plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Gathering the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers may find it challenging to organize and file 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 errors can lead to audit failures, sanctions, 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: Audit preparation takes HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 properly and punctually, which plays a critical role in 401(k) compliance. Missing the deadline can result in penalties and create further issues for the company.
At Correct Capital, we understand these challenges and provide tailored support to make the audit process in Jacksonville, 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 Jacksonville, FL employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans enable different employers to join a single 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup allows Jacksonville, FL businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to enter a unified 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it appealing for Jacksonville, FL 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. Switching to these types of plans may be particularly attractive for small companies in Jacksonville, FL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Jacksonville, FL 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance changes everything. Working with a team that has a firm grasp of both technical and practical elements of the audit process reduces the time and pressure you face. Here’s why partnering with the right experts matters:
- Experience and Expertise: A skilled team is knowledgeable about the details of 401(k) audits, including 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 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 partner with you to grasp the unique needs of your plan and assist you in getting ready 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: Audit preparation can distract you significantly from day-to-day operations. The ideal support will handle most of the administrative tasks, giving your HR and finance teams the freedom to concentrate on other tasks. 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
Working with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Jacksonville, FL goes as smoothly as possible. With Correct Capital as your partner, you’ll be assured that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Jacksonville, FL
Complying with 401(k) audits is both a regulatory obligation and an important way to confirm your Jacksonville, FL company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s knowledge of helping Jacksonville, FL businesses navigate the 401(k) audit lightens the load, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will assist with everything from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Jacksonville, FL advisor team, contact us online, or call us at 877-930-401(k) to start the process.
