401(k) Audit Services in Knoxville, TN. For Knoxville, TN businesses offering their employees retirement plans, completing 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 does not need to disrupt your business and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they cannot be avoided. Our team will work with you with every aspect of document collection through making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Knoxville, TN, or looking to streamline a previously cumbersome process, we're here to make it as simple and stress-free as possible. 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.
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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 yearly review necessary for Knoxville, TN companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively participating in the plan, you must still undergo 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 established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s overall financial health, ensuring that employee contributions, withdrawals, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complicated and demanding. Correct Capital supports Knoxville, TN businesses navigate these audits by aiding in document collection, ensuring comprehension of compliance testing, etc... With the right support, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Knoxville, TN Companies?
You must undergo a 401(k) audit for multiple purposes, ensuring that retirement plans stay in line with 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 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 verifies whether the plan does not unfairly favor higher-paid employees (often called “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other aspects of plan management, allowing you to correct these issues to avoid fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, an annual report that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions remain within IRS contribution limits, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to ensure they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Knoxville, TN employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Verifying 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 primary types of 401(k) Audits that Knoxville, TN employers may encounter, depending on factors such as the size and nature 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 necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor evaluates all components of the plan, which includes financial statements, adherence to 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 referred to as 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 be eligible for a limited-scope audit. In this type, the auditor is not required to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This may make it a more attractive option for some Knoxville, TN businesses, provided they meet the criteria.
The specific audit required depends on your plan’s specific details, such as the nature of its investments. At Correct Capital, we are able to assist you determine which type of audit your plan requires and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Knoxville, TN Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Knoxville, TN employers, particularly those managing larger plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to sort through and file the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations is difficult. Compliance oversights can cause audit failures, fines, and costly corrections down the line.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others out of their core responsibilities, heightening pressure and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Missing the deadline may lead to 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 Knoxville, TN. Be it document collection or verifying adherence to 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 Knoxville, TN employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans allow unrelated employers to participate in a unified 401(k) plan, often eliminating 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 Knoxville, TN businesses to distribute the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs enable unrelated employers to participate in a collective 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it a desirable option for Knoxville, TN businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while ensuring regulatory compliance. Switching to these types of plans may be especially appealing to smaller businesses in Knoxville, TN, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Knoxville, TN 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place can make all the difference. 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 details of 401(k) audits, covering both full-scope and limited-scope audits. We will assist you with the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team ensures you keep up 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 identify the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, with more than $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: Audit preparation can consume a lot of time from day-to-day operations. The right partner will handle most of the administrative tasks, allowing your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is no longer mandated, you're still obligated to adhere to all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Knoxville, TN goes as smoothly as possible. With Correct Capital by your side, you’ll feel secure that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Knoxville, TN
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to ensure your Knoxville, TN company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Knoxville, TN businesses navigate the 401(k) audit reduces the strain, allowing you to focus on your business while ensuring you're not penalized 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, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Knoxville, TN advisor team, contact us online, or call us at 877-930-401(k) to get started.
