401(k) Audit Services in Madison, WI. For Madison, WI businesses offering their employees retirement plans, completing a 401(k) audit can feel like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, it can be overwhelming. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they are mandatory. Our team will assist you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Madison, WI, or looking to streamline a process that's usually a burden, we're here to ensure it’s as smooth and easy as possible. You can ask for 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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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 required for Madison, WI companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively enrolled in the plan, you are still required to have an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan adheres to the regulations mandated 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 faithfully recorded.
While necessary for compliance, 401(k) audits can be challenging and lengthy. Correct Capital assists Madison, WI businesses navigate these audits by helping with document collection, ensuring comprehension of compliance testing, etc... With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Madison, WI Companies?
You are required to 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 you need them:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan adheres to 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 known as “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, distributions, or additional plan operations, providing an opportunity to fix these issues before they result in penalties.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, a yearly filing that outlines the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions stay within IRS contribution limits, reducing the risk of excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. Excessive fees may prompt compliance concerns and hurt the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Madison, WI employers are working to benefit plan participants, meeting 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 a critical part of the audit.
Types of 401(k) Audits
There are two primary types of 401(k) Audits that Madison, WI 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 thorough audit required 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, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, withdrawls, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these pertain to 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 obligated 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 preferable choice for some Madison, WI businesses, provided they meet the criteria.
The specific audit required depends on your plan’s unique features, including the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan is subject to and help you be well-prepared for either process.
401(k) Audit Pain Points for Madison, WI Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Madison, WI employers, especially those overseeing more substantial retirement plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to organize and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations is difficult. Compliance errors can cause audit failures, fines, and costly corrections in the long run.
- Discrimination Testing: Making sure that the plan isn’t top-heavy requires careful compliance checks and can necessitate 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, increasing stress and distracting them from everyday business tasks.
- 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. Failing to meet the submission date may lead to penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and provide tailored support to streamline the audit procedure in Madison, WI. 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 Madison, WI employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) 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 combine several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Madison, WI businesses to share 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 managed by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it attractive for Madison, WI businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Moving to one of these plans may be especially appealing to smaller businesses in Madison, WI, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Madison, WI 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place 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 working with the right specialists is crucial:
- Experience and Expertise: A skilled team is knowledgeable about the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We can guide you through the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team ensures you keep up 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 assist you in getting ready 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, which allows us to understand the nuances 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 shoulder a lot of the admin work, 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 in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an audit specific to your plan 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 well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Madison, WI is as painless as possible. With Correct Capital supporting you, 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 Madison, WI
Adhering to 401(k) audit regulations is both a mandatory process and an important way to confirm your Madison, WI company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Madison, WI businesses navigate the 401(k) audit helps ease the burden, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Madison, WI advisor team, contact us online, or call us at 877-930-401(k) to begin.