401(k) Audit Services in Montgomery, AL. For Montgomery, AL businesses offering their employees retirement plans, completing a 401(k) audit can feel like an uphill battle. Between regulation 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 affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they cannot be avoided. Our team will partner with you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Montgomery, AL, or hoping to optimize a previously inefficient process, we're here to make it as simple and stress-free 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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About 401(k) Audits
A 401(k) audit is an yearly review mandated for Montgomery, AL companies with at least 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 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, distributions, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be challenging and time-consuming. Correct Capital supports Montgomery, AL businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, etc... With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Montgomery, AL Companies?
You must undergo a 401(k) audit for several reasons, to ensure retirement plans adhere to 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 follows 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 isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in contributions, withdrawals, 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, an annual report summarizing the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions stay within IRS limits for the year, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Montgomery, AL employers are working to benefit plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two primary types of 401(k) Audits that Montgomery, AL 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 external 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 evaluates 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 apply 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 required 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 Montgomery, 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 can help you figure out which type of audit your plan requires and make sure you're ready for both audit types.
401(k) Audit Pain Points for Montgomery, AL Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Montgomery, AL employers, notably those managing larger plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Gathering the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to organize and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance errors can lead to audit failures, fines, and pricey amendments down the line.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which is essential to 401(k) compliance. Late submissions may lead to penalties and create further issues for the company.
At Correct Capital, we understand these challenges and offer customized assistance to streamline the audit procedure in Montgomery, AL. Whether it’s helping 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 Montgomery, AL employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. 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 allows Montgomery, 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 enable unrelated employers to join a shared 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it a desirable option for Montgomery, AL businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Montgomery, AL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Montgomery, AL 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance changes everything. Partnering with professionals that has a firm grasp of both technical and practical elements 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 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 highlight areas for enhancement within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to understand the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, representing over $212 million in total plan assets across the United States, enabling us to understand the specifics of any company 401(k) plan.
- Saving Time and Resources: Audit preparation can consume a lot of time from day-to-day operations. The ideal support will shoulder a lot of the admin work, 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 enrolled in an MEP or PEP, while an individual plan audit is no longer necessary, you're still required to comply with all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Montgomery, AL goes as smoothly as possible. With Correct Capital by your side, 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 Montgomery, AL
Meeting 401(k) audit requirements is both a mandatory process and an opportunity to verify your Montgomery, AL company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Montgomery, AL businesses complete the 401(k) audit reduces the strain, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and we'll guide you prepare for a smooth, efficient 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 Montgomery, AL advisor team, contact us online, or call us at 877-930-401(k) to start the process.