401(k) Audit Services in Mobile, AL. For Mobile, AL 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, collecting extensive documentation, and ensuring that your plan isn’t “top-heavy”, it can be overwhelming. 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 and 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 navigating your first audit in Mobile, AL, or hoping to optimize a previously cumbersome process, we're here to make it as simple and stress-free as possible. You can schedule 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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About 401(k) Audits
A 401(k) audit is an annual review necessary for Mobile, AL 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 contributing to the plan, you are still required to have 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 reviews the plan’s financial integrity, ensuring that employee contributions, withdrawals, and plan activities are accurately represented.
While required for regulatory purposes, 401(k) audits can be complex and demanding. Correct Capital supports Mobile, AL businesses prepare for these audits by assisting with document collection, assisting with understanding compliance testing, and other related tasks. With an experienced team in your corner, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Mobile, AL Companies?
You must undergo a 401(k) audit for several reasons, ensuring that retirement plans remain compliant with federal regulations and safeguard both the employer and employees. Here’s why they are required:
- 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, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, withdrawals, or other aspects of plan management, enabling you to resolve these issues so they don't lead to fines.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a yearly filing summarizing the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS limits for the year, preventing excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and hurt the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Mobile, AL employers are acting in the best interest of plan participants, satisfying 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 one of the most important parts of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Mobile, AL employers may encounter, based on the specific details 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 mandated for most larger 401(k) plans. In a full-scope audit, the third-party 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 examines supporting documentation for contributions, withdrawls, 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 pertain to plans with investments held by a qualified, regulated financial institution (such as a bank or insurance company). The employer may take advantage of a limited-scope audit. In this type, the auditor is not obligated to audit the investment information verified by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a more attractive option for some Mobile, AL businesses, provided they meet the criteria.
The type of audit you need is based on your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we will guide you to determine which type of audit your plan is subject to and help you be well-prepared for either process.
401(k) Audit Pain Points for Mobile, AL Employers
While 401(k) audits are necessary for compliance, they frequently pose difficulties for Mobile, AL employers, particularly 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 a lengthy process. Employers frequently have difficulties to organize and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can lead to audit failures, penalties, and pricey amendments in the long run.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees demands thorough checks for compliance and can result in additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit draws HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which is a key component of 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 provide tailored support to streamline the audit procedure in Mobile, AL. From assisting with document collection or confirming conformity 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 Mobile, AL employers hoping to ease the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans allow unrelated employers to participate in a unified 401(k) plan, frequently removing 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 Mobile, AL businesses to distribute the administrative responsibilities and often sidestep 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 managed by a pooled plan provider (PPP). This structure makes meeting regulations easier and reduces costs, making it a desirable option for Mobile, AL 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 especially appealing to smaller businesses in Mobile, AL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Mobile, AL 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance changes everything. Working with a team 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 team of experts will be familiar with 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 will help you stay on top of evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to grasp the unique needs of your plan and assist you in getting ready 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, giving us the expertise to handle any company 401(k) plan.
- Saving Time and Resources: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The right partner will shoulder a lot of the admin work, enabling your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is not required, you're still required to comply with all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Mobile, AL is as painless as possible. With Correct Capital by your side, you’ll feel secure that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Mobile, AL
Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to ensure your Mobile, AL company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Mobile, AL businesses navigate the 401(k) audit helps ease the burden, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you get ready for a streamlined, effective audit. Our team of experts will help with all aspects from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Mobile, AL advisor team, contact us online, or call us at 877-930-401(k) to get started.
