401(k) Audit Little Rock, AR

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401(k) Audit Services in Little Rock, AR. For Little Rock, AR businesses that offer retirement plans, completing a 401(k) audit can feel like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, 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 create significant headaches even though they are mandatory. Our team will partner with you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Little Rock, AR, or looking to streamline a process that's usually a burden, we're here to make it as simple and stress-free 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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About 401(k) Audits

A 401(k) audit is an annual review necessary for Little Rock, AR companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you must still undergo an audit if there are 100 who are eligible. The audit ensures that the retirement plan complies with the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s overall financial health, ensuring that employee contributions, withdrawals, and operations are faithfully recorded.

While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital assists Little Rock, AR businesses navigate these audits by helping with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team in your corner, getting through the audit can become a much easier process.

Why are 401(k) Audits Necessary for Little Rock, AR Companies?

You need to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why you need them:

  • Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements established 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 isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
  • Identifying Operational Issues: Audits may reveal errors in employee contributions, withdrawals, or other aspects of plan management, 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 detailing 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, preventing 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. Excessive fees may prompt compliance concerns and affect how employees' investments and savings perform.
  • Fiduciary Oversight: The audit confirms that Little Rock, AR employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as outlined in 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 main categories of 401(k) audits that Little Rock, AR 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 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 confirm correctness and adherence to regulations.
  • Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these apply to plans with investments overseen 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 verified by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a preferable choice for some Little Rock, AR businesses, as long as they meet the criteria.

The kind of audit your plan needs is determined by your plan’s unique features, such as the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan needs and ensure you're fully prepared for both audit types.

401(k) Audit Pain Points for Little Rock, AR Employers

While 401(k) audits are necessary for compliance, they can create major obstacles for Little Rock, AR employers, particularly those managing larger plans. These are some of the major issues that employers encounter:

  • Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be labor-intensive. Employers frequently have difficulties to organize and deliver the necessary paperwork, especially for larger, more complex plans.
  • Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance missteps can result in audit failures, fines, and expensive fixes down the line.
  • Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can necessitate additional documentation and reporting.
  • Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and shifting focus from day-to-day operations.
  • Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which is essential to 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 provide tailored support to make the audit process in Little Rock, AR smoother. From assisting 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 Little Rock, AR employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can provide solutions. These plans enable different employers to consolidate into one 401(k) plan, reducing the need for employer-specific audits.

  • Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup enables Little Rock, AR businesses to distribute the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it attractive for Little Rock, AR businesses seeking to simplify their retirement offerings.

Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Little Rock, AR, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.

Working with the Right Little Rock, AR 401(k) Audit Team

401(k) audits can seem difficult, but selecting the proper assistance can greatly improve the process. Partnering with professionals that understands both the technical and practical aspects of the audit process reduces the time and pressure you face. Here’s why having the right experts on your side is important:

  • Experience and Expertise: A skilled team will be familiar with the complexities of 401(k) audits, including both full-scope and limited-scope audits. We help you navigate the documentation process and help identify areas of improvement within your plan.
  • Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
  • Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to grasp 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, 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: Preparing for a 401(k) audit can take considerable time away from day-to-day operations. The ideal support will shoulder a lot of the admin work, allowing your HR and finance teams the freedom to concentrate on other tasks. Correct Capital helps streamline the process, easing the load for your internal team.
  • MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an separate 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

Partnering with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Little Rock, AR runs efficiently and stress-free. With Correct Capital by your side, you’ll be assured that your audit will be completed efficiently and accurately.

Call Correct Capital for Help With Your 401(k) Audit in Little Rock, AR

Adhering to 401(k) audit regulations is both a mandatory process and an opportunity to verify your Little Rock, AR company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Little Rock, AR businesses navigate the 401(k) audit helps ease the burden, enabling you to concentrate on your operations while preventing penalties for non-compliance.

Contact Correct Capital today to book a meeting and let us help you prepare for a smooth, efficient audit. 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 Little Rock, AR advisor team, contact us online, or call us at 877-930-401(k) to get started.


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