401(k) Audit Services in Milwaukee, WI. For Milwaukee, WI businesses that offer retirement plans, completing a 401(k) audit can feel like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, 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 interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches and cannot be avoided. Our team will work with you for everything from document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Milwaukee, WI, or looking to streamline a previously cumbersome process, we're here to minimize the hassle. You can schedule 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.
About 401(k) Audits
A 401(k) audit is an yearly review mandated for Milwaukee, WI companies with more than 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 are eligible. The audit verifies that the retirement plan follows the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that contributions, withdrawals, and plan activities are accurately represented.
While required for regulatory purposes, 401(k) audits can be complicated and lengthy. Correct Capital supports Milwaukee, WI businesses get ready for these audits by helping with document collection, ensuring comprehension of compliance testing, and other related tasks. With the right support, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Milwaukee, WI Companies?
You must 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: A 401(k) audit guarantees that your 401(k) plan follows 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 guarantee fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, distributions, or other aspects of plan management, enabling you to resolve these issues to avoid penalties.
- Filing Form 5500: The audit confirms 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 remain within IRS limits for the year, helping to avoid excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. High fees can raise compliance concerns and hurt the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit ensures that Milwaukee, WI employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Confirming 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 primary types of 401(k) Audits that Milwaukee, WI employers could face, 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 mandated for most larger 401(k) plans. In a full-scope audit, the independent auditor examines every part of the plan, which includes financial statements, compliance 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: Previously called 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 qualify for a limited-scope audit. In this type, the auditor is not obligated to audit the investment information certified by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a better alternative for some Milwaukee, WI businesses, provided they meet the criteria.
The kind of audit your plan needs is determined by your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we can help you determine which type of audit your plan is subject to and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for Milwaukee, WI Employers
While 401(k) audits are required to meet legal obligations, they often present significant challenges for Milwaukee, WI employers, especially those managing larger plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Gathering the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers frequently have difficulties to arrange and submit 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 oversights can lead to audit failures, penalties, and expensive fixes down the line.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation 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 have difficulty with file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Failing to meet the submission date can result in 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 Milwaukee, WI. Whether it’s helping with document collection or ensuring compliance with regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Milwaukee, WI employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans 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, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup allows Milwaukee, WI businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it attractive for Milwaukee, WI businesses seeking to simplify 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 particularly attractive for small companies in Milwaukee, WI, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Milwaukee, WI 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Collaborating with experts that is well-versed in both the technicalities and practicalities 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 details of 401(k) audits, covering 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 helps you remain up to date with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. An experienced team will collaborate with you to grasp 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, representing over $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 take considerable time away from day-to-day operations. The proper team will take on much of the administrative burden, allowing your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (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
Partnering with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Milwaukee, WI runs efficiently and stress-free. With Correct Capital by your side, you’ll be assured that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Milwaukee, WI
Complying with 401(k) audits is both a mandatory process and an opportunity to verify your Milwaukee, WI company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Milwaukee, WI businesses complete the 401(k) audit lightens the load, allowing you to focus on your business while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will assist with everything from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Milwaukee, WI advisor team, contact us online, or call us at 877-930-401(k) to start the process.
