401(k) Audit Services in Kansas City, MO. For Kansas City, MO businesses that offer retirement plans, navigating a 401(k) audit can feel like an uphill battle. 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”, there are many factors to consider. However, with the right support, the 401(k) audit can be made much easier and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress and are a regulatory requirement. Our team will work with you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Kansas City, MO, or hoping to optimize a process that's usually a burden, we're here to minimize the hassle. You can book 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
More From Correct Capital Wealth Management
Explore how Correct Capital Wealth Management can help guide you toward smarter decisions, clearer goals, and lasting financial success.
Subscribe To Our Newsletter Listen To Our Podcast Watch Our YouTube Channel
About 401(k) Audits
A 401(k) audit is an annual review mandated for Kansas City, MO companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively enrolled in the plan, you must still undergo an audit if there are 100 who are eligible. The audit verifies that the retirement plan complies with the regulations set 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 properly documented.
While required for regulatory purposes, 401(k) audits can be complex and demanding. Correct Capital helps Kansas City, MO businesses navigate these audits by helping with document collection, assisting with understanding compliance testing, etc... With an experienced team by your side, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Kansas City, MO Companies?
You are required to undergo a 401(k) audit for a variety of reasons, to ensure retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements mandated by the Department of Labor (DOL) and the IRS, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if 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 may reveal errors in contributions, distributions, or other facets of plan oversight, providing an opportunity to fix these issues so they don't lead to fines.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a yearly filing that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions remain within IRS contribution limits, helping to avoid excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may examine 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 Kansas City, MO employers are working to benefit plan participants, satisfying their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Verifying that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Kansas City, MO employers might come across, 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 most detailed 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, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, distributions, and other transactions to ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these pertain to plans with investments managed 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 does not need to audit the investment information verified by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a better alternative for some Kansas City, MO businesses, as long as they meet the criteria.
The specific audit required is based on your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan needs and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Kansas City, MO Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Kansas City, MO employers, notably those offering bigger 401(k) plans. These are some of the major issues that employers encounter:
- Document Collection and Management: Gathering the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers frequently have difficulties to sort through and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can result in audit failures, sanctions, and pricey amendments in the long run.
- Discrimination Testing: Verifying that the plan isn’t top-heavy demands thorough checks for compliance and can lead to additional documentation and reporting.
- Time and Resource Demands: Audit preparation draws HR professionals, business owners, administrators, and others off 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 properly and punctually, which plays a critical role in 401(k) compliance. Failing to meet the submission date could cause penalties and complicate things for the company.
At Correct Capital, we understand these challenges and deliver personalized help to make the audit process in Kansas City, MO more efficient. From assisting with 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 Kansas City, MO employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs 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 Kansas City, MO businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs allow unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it appealing for Kansas City, MO 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. Transitioning into an MEP or PEP may be particularly attractive for small companies in Kansas City, MO, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Kansas City, MO 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place changes everything. Collaborating with experts that is well-versed in both the technicalities and practicalities 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 will be familiar with the nuances of 401(k) audits, covering 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 helps you remain up to date with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to identify the unique needs of your plan and guide you in preparing 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, giving us the expertise to handle 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 take on much of the administrative burden, allowing 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 enrolled in an MEP or PEP, while an individual plan audit is no longer necessary, you're still responsible for following all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Kansas City, MO runs efficiently and stress-free. With Correct Capital as your partner, you’ll have the confidence that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Kansas City, MO
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to ensure your Kansas City, MO company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Kansas City, MO businesses complete the 401(k) audit lightens the load, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist 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 Kansas City, MO advisor team, contact us online, or call us at 877-930-401(k) to get started.
