401(k) Audit Services in Joliet, IL. For Joliet, IL businesses that offer retirement plans, completing a 401(k) audit can feel like a challenging process. Between compliance requirements 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 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 work with you for everything from document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Joliet, IL, or hoping to optimize a previously cumbersome 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, fill out our online form, 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 annual review mandated for Joliet, IL companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively participating in the plan, you must still undergo an audit if there are 100 who are eligible. The audit verifies that the retirement plan adheres to the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s financial integrity, ensuring that employee contributions, withdrawals, and operations are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be complex and demanding. Correct Capital helps Joliet, IL businesses prepare for these audits by aiding in document collection, assisting with understanding compliance testing, etc... With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Joliet, IL Companies?
You are required to undergo a 401(k) audit for a variety of reasons, to ensure retirement plans remain compliant with federal regulations and safeguard both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan adheres to 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 verifies whether the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, distributions, or additional plan operations, enabling you to resolve these issues so they don't lead to penalties.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, an annual report that outlines 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 may result in penalties.
- Fee Reasonableness: Auditors may examine 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 ensures that Joliet, IL employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are consistent 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 Joliet, IL 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 necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor examines every part of the plan, including 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 verify that everything is accurate and in 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 be eligible for a limited-scope audit. In this type, the auditor is not obligated to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a more attractive option for some Joliet, IL businesses, as long as they meet the criteria.
The kind of audit your plan needs is determined by your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan needs and help you be well-prepared for either process.
401(k) Audit Pain Points for Joliet, IL Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Joliet, IL employers, notably those overseeing more substantial retirement plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to organize and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations is difficult. Compliance errors can cause audit failures, sanctions, and expensive fixes down the line.
- Discrimination Testing: Making sure 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: Preparing for an audit draws HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and shifting focus from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 properly and punctually, which is essential to 401(k) compliance. Late submissions could cause penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and offer customized assistance to streamline the audit procedure in Joliet, IL. Be it 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 Joliet, IL employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. 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, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup permits Joliet, IL businesses to divide the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and reduces costs, making it attractive for Joliet, IL businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Switching to these types of plans may be particularly attractive for small companies in Joliet, IL, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Joliet, IL 401(k) Audit Team
401(k) audits can seem difficult, but having the right team in place changes everything. 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 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 help identify areas of improvement within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will work closely with you to understand the unique needs of your plan and guide you in preparing 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Preparing for a 401(k) audit can consume a lot of time from day-to-day operations. The proper team will handle most of the administrative tasks, allowing 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 in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an individual plan audit is no longer mandated, you're still responsible for following all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Joliet, IL runs efficiently and stress-free. With Correct Capital as your partner, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Joliet, IL
Complying with 401(k) audits is both a legal requirement and an opportunity to verify your Joliet, IL company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Joliet, IL businesses through 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 book a meeting and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Joliet, IL advisor team, contact us online, or call us at 877-930-401(k) to begin.
