401(k) Audit Services in Memphis, TN. For Memphis, TN businesses offering their employees retirement plans, completing a 401(k) audit can seem like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, 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 interfere with your company’s daily operations.

At Correct Capital, we understand that 401(k) audits can create significant headaches even though they cannot be avoided. Our team will partner with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Memphis, TN, or seeking to simplify 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.


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About 401(k) Audits

A 401(k) audit is an annual review mandated for Memphis, TN 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 participating in the plan, you must still undergo an audit if there are 100 who are eligible. The audit confirms that the retirement plan adheres to the regulations set by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that employee contributions, distributions, and operations are faithfully recorded.

While necessary to meet legal requirements, 401(k) audits can be challenging and demanding. Correct Capital supports Memphis, TN businesses get ready for these audits by helping with document collection, helping clarify compliance testing, etc... With the right support, handling the audit process can become a far more manageable task.

Why are 401(k) Audits Necessary for Memphis, TN Companies?

You are required to undergo a 401(k) audit for several reasons, 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: The purpose of audits is to confirm that your 401(k) plan complies with 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 verifies whether the plan disproportionately benefits 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 so they don't lead to penalties.
  • Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a required document summarizing 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 limits for the year, reducing the risk of excess contributions that may result in penalties.
  • Fee Reasonableness: Auditors may examine plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
  • Fiduciary Oversight: The audit ensures that Memphis, TN employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
  • Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is a key part of the audit.

Types of 401(k) Audits

There are two primary types of 401(k) Audits that Memphis, TN 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 more comprehensive audit required for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, which includes financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, distributions, and other transactions to ensure accuracy and compliance.
  • Section 103(a)(3)(C)) Audit: Previously called 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 substantially lower the audit’s complexity and cost. This could make it a more attractive option for some Memphis, TN businesses, if they satisfy the criteria.

The specific audit required is based on your plan’s unique features, like the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan is subject to and ensure you're fully prepared for either process.

401(k) Audit Pain Points for Memphis, TN Employers

While 401(k) audits are necessary for compliance, they can create major obstacles for Memphis, TN employers, notably those offering bigger 401(k) plans. Below are several common challenges that employers encounter:

  • 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 organize and deliver the necessary paperwork, especially for larger, more complex plans.
  • Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations is difficult. Compliance oversights can lead to audit failures, fines, and costly corrections in the long run.
  • Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can result in additional documentation and reporting.
  • Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others off of their core responsibilities, adding strain and distracting them from day-to-day operations.
  • Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Late submissions may lead to penalties and complicate things for the company.

At Correct Capital, we are aware of the difficulties involved and offer customized assistance to streamline the audit procedure in Memphis, TN. From assisting with document collection or ensuring compliance 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 Memphis, TN employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can provide solutions. These plans enable different employers to consolidate into one 401(k) plan, often eliminating 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 permits Memphis, TN businesses to divide the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): A more recent development, PEPs allow unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and cuts costs, making it appealing for Memphis, TN businesses looking to streamline their retirement offerings.

Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while ensuring regulatory compliance. Switching to these types of plans may be particularly attractive for small companies in Memphis, TN, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.

Working with the Right Memphis, TN 401(k) Audit Team

401(k) audits can seem difficult, but choosing the right support changes everything. Collaborating with experts that has a firm grasp of both technical and practical elements 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 understands the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and pinpoint potential improvements within your plan.
  • Compliance Assurance: The right team will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
  • 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, 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 distract you significantly from day-to-day operations. The right partner will handle most of the administrative tasks, giving your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, reducing the pressure on your internal team.
  • MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an individual plan audit is not required, you're still responsible for following all the rules and regulations, but with fewer administrative responsibilities after plan year end.

*as of March 2024

Partnering with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Memphis, TN is as painless as possible. With Correct Capital as your partner, you’ll feel secure that your audit will be conducted thoroughly and on time.

Call Correct Capital for Help With Your 401(k) Audit in Memphis, TN

Adhering to 401(k) audit regulations is both a mandatory process and an opportunity to verify your Memphis, TN company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Memphis, TN 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 book a meeting and let us help you get ready for a streamlined, effective audit. Our team of experts will help with all aspects from document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Memphis, TN advisor team, contact us online, or call us at 877-930-401(k) to start the process.


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