401(k) Audit Services in Lincoln, NE. For Lincoln, NE businesses offering their employees retirement plans, navigating a 401(k) audit can seem like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, there is a lot to keep track of. 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 be a major source of stress even though they are a regulatory requirement. Our team will assist you with every aspect of document collection through making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Lincoln, NE, or looking to streamline a previously inefficient process, we're here to minimize the hassle. You can book a meeting with a member of our advisor team, contact us online, or call us at 877-930-401(k) to get started.
What is a 401(k) Audit?
A 401(k) audit is an annual review necessary for Lincoln, NE companies who have more than 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 are still required to have an audit if there are 100 who are eligible. The audit ensures 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 contributions, withdrawals, and plan activities are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be complicated and time-consuming. Correct Capital supports Lincoln, NE businesses navigate these audits by assisting with document collection, assisting with understanding compliance testing, as well as other audit processes. With the right support, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Lincoln, NE Companies?
You must undergo a 401(k) audit for several reasons, ensuring that 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: Audits ensure that your 401(k) plan adheres to all legal requirements mandated 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 isn't overly advantageous to 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 employee contributions, distributions, or additional plan operations, allowing you to correct these issues so they don't lead to fines.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, an annual report that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions do not exceed IRS contribution limits, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Lincoln, NE employers are acting in the best interest 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 in compliance 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 Lincoln, NE 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 most detailed audit necessary for most larger 401(k) plans. In a full-scope audit, the external auditor examines every part 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 verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these pertain to 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 required to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This can make it a more attractive option for some Lincoln, NE businesses, as long as they meet the criteria.
The specific audit required depends on your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan needs and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Lincoln, NE Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Lincoln, NE employers, notably those running bigger 401(k) plans. Below are several common challenges that businesses face:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to arrange and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can lead to audit failures, fines, and costly corrections later on.
- Discrimination Testing: Making sure that the plan isn’t top-heavy 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, heightening pressure and distracting them from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which plays a critical role in 401(k) compliance. Missing the deadline could cause 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 Lincoln, NE 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 Lincoln, NE employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. These plans enable different employers to consolidate into one 401(k) plan, often eliminating 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 Lincoln, NE businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs permit unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it appealing for Lincoln, NE businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while still ensuring compliance with federal regulations. Switching to these types of plans may be highly beneficial for smaller firms in Lincoln, NE, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Lincoln, NE 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support 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 highly experienced group will be familiar with the details of 401(k) audits, including 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 helps you remain up to date with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will partner with you to grasp 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, representing 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 take on much of the administrative burden, enabling your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, 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 obligated to adhere to all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Lincoln, NE runs efficiently and stress-free. With Correct Capital as your partner, you’ll have the confidence that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Lincoln, NE
Complying with 401(k) audits is both a regulatory obligation and an opportunity to verify your Lincoln, NE company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Lincoln, NE businesses complete the 401(k) audit reduces the strain, enabling you to concentrate on your operations while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will help with all aspects 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 Lincoln, NE advisor team, contact us online, or call us at 877-930-401(k) to start the process.
