401(k) Audit Services in Kansas City, KS. For Kansas City, KS businesses offering their employees retirement plans, completing a 401(k) audit can feel like a daunting task. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, there are many factors to consider. However, with the right support, the 401(k) audit can be made much easier and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration and are mandatory. Our team will partner with you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Kansas City, KS, or seeking to simplify a process that's usually a burden, we're here to minimize the hassle. 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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What is a 401(k) Audit?
A 401(k) audit is an annual review mandated for Kansas City, KS companies with 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 confirms that the retirement plan follows 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 required for regulatory purposes, 401(k) audits can be complicated and time-consuming. Correct Capital assists Kansas City, KS businesses get ready for these audits by aiding in document collection, helping clarify compliance testing, as well as other audit processes. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Kansas City, KS Companies?
You need to undergo a 401(k) audit for several reasons, ensuring that retirement plans adhere to federal regulations and protect both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan complies with all legal requirements mandated by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, withdrawals, or additional plan operations, providing an opportunity to fix these issues to avoid penalties.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, an annual report detailing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions remain within IRS contribution limits, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Kansas City, KS employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Kansas City, KS employers may encounter, depending on factors such as the size and nature 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 required for most larger 401(k) plans. In a full-scope audit, the external auditor examines every part of the plan, including financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, withdrawls, and other transactions to ensure accuracy and compliance.
- 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 does not need to audit the investment information endorsed by the financial institution, which can substantially lower the audit’s complexity and cost. This can make it a better alternative for some Kansas City, KS businesses, provided they meet the criteria.
The specific audit required is based on your plan’s specific details, such as the nature of its investments. At Correct Capital, we can help you figure out which type of audit your plan requires and ensure you're fully prepared for both audit types.
401(k) Audit Pain Points for Kansas City, KS Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Kansas City, KS employers, notably those running bigger 401(k) plans. Here are some of the key pain points that companies deal with:
- Document Collection and Management: Gathering the right documents, 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, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can lead to audit failures, sanctions, and costly corrections in the long run.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others out of their core responsibilities, adding strain and diverting attention from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which plays a critical role in 401(k) compliance. Failing to meet the submission date can result in penalties and create further issues for the company.
At Correct Capital, we understand these challenges and offer customized assistance to make the audit process in Kansas City, KS less stressful. Whether it’s helping with document collection or verifying adherence to regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Kansas City, KS employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans permit various businesses to join a single 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup enables Kansas City, KS businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs permit unrelated employers to enter a unified 401(k) plan administered by a pooled plan provider (PPP). This structure simplifies compliance and lowers expenses, making it a desirable option for Kansas City, KS businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be particularly attractive for small companies in Kansas City, KS, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Kansas City, KS 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support can greatly improve the process. Partnering with professionals that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A highly experienced group is knowledgeable about the complexities 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 will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
- 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 help you prepare for your specific audit requirements. Correct Capital handles more than 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: Getting ready 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, enabling your HR and finance teams the ability to address other important matters. Correct Capital simplifies the entire process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an individual plan audit is not required, you're still required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Kansas City, KS runs efficiently and stress-free. With Correct Capital supporting you, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Kansas City, KS
Complying with 401(k) audits is both a legal requirement and an opportunity to ensure your Kansas City, KS company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Kansas City, KS businesses navigate the 401(k) audit reduces the strain, enabling you to concentrate on your operations 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 through to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Kansas City, KS advisor team, contact us online, or call us at 877-930-401(k) to start the process.
