401(k) Audit Services in Mesa, AZ. For Mesa, AZ businesses offering their employees retirement plans, completing a 401(k) audit can seem like a daunting task. Between regulation 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 cause considerable frustration and cannot be avoided. Our team will assist you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Mesa, AZ, or hoping to optimize a previously inefficient process, 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, fill out our online form, or call us at 877-930-401(k) to get started.
Schedule a Meeting With an Advisor Today
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.
Schedule a 15-Minute Introductory Call
What is a 401(k) Audit?
A 401(k) audit is an annual review necessary for Mesa, AZ companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled in the plan, you must still undergo an audit if there are 100 who are eligible. The audit verifies that the retirement plan complies with 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, withdrawals, and operations are properly documented.
While necessary for compliance, 401(k) audits can be challenging and time-consuming. Correct Capital helps Mesa, AZ businesses navigate these audits by helping with document collection, ensuring comprehension of compliance testing, and other related tasks. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Mesa, AZ Companies?
You are required to undergo a 401(k) audit for multiple purposes, ensuring that retirement plans remain compliant with federal regulations and protect 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 adheres to 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 checks if the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in contributions, withdrawals, or other aspects of plan management, providing an opportunity to fix 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, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions remain within IRS limits for the year, helping to avoid 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. High fees can raise compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Mesa, AZ employers are working to benefit plan participants, fulfilling their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Mesa, AZ 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 necessary for most larger 401(k) plans. In a full-scope audit, the independent 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 evaluates supporting documentation for contributions, distributions, 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 are for 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 significantly reduce the audit’s complexity and cost. This may make it a better alternative for some Mesa, AZ businesses, provided they meet the criteria.
The type of audit you need depends on your plan’s unique features, such as the nature of its investments. At Correct Capital, we can help you figure out which type of audit your plan requires and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Mesa, AZ Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Mesa, AZ employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be time-consuming. Employers may find it challenging to sort through and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can lead to audit failures, fines, and expensive fixes later on.
- Discrimination Testing: Verifying that the plan isn’t top-heavy involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit takes HR professionals, business owners, administrators, and others off of their core responsibilities, increasing stress and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which plays a critical role in 401(k) compliance. Late submissions may lead to penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and offer customized assistance to make the audit process in Mesa, AZ smoother. Be it 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 Mesa, AZ employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans allow unrelated 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 allows Mesa, AZ businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to enter a unified 401(k) plan administered by a pooled plan provider (PPP). This structure simplifies compliance and cuts costs, making it attractive for Mesa, AZ 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. Moving to one of these plans may be especially appealing to smaller businesses in Mesa, AZ, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Mesa, AZ 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can make all the difference. Partnering with professionals that understands both the technical and practical aspects of the audit process can save you significant time and stress. Here’s why having the right experts on your side is important:
- Experience and Expertise: A skilled team is knowledgeable about the complexities of 401(k) audits, including both full-scope and limited-scope audits. We will assist you with the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to understand the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, with more than $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: Audit preparation can distract you significantly from day-to-day operations. The right partner will handle most of the administrative tasks, allowing your HR and finance teams the ability to address other important matters. Correct Capital simplifies the entire process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an separate audit is no longer mandated, you're still responsible for following all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Collaborating with a experienced, reliable team is essential to making sure your 401(k) audit in Mesa, AZ is as painless as possible. With Correct Capital by your side, 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 Mesa, AZ
Complying with 401(k) audits is both a legal requirement and an opportunity to verify your Mesa, AZ company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Mesa, AZ businesses through the 401(k) audit lightens the load, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and we'll guide you get ready for a streamlined, effective audit. Our team of experts will support you with everything, including document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Mesa, AZ advisor team, contact us online, or call us at 877-930-401(k) to begin.
