401(k) Audit Services in Moreno Valley, CA. For Moreno Valley, CA businesses that offer retirement plans, completing a 401(k) audit can seem like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't favor higher-paid employees, there is a lot to keep track of. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are a regulatory requirement. Our team will work with you for everything from document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Moreno Valley, CA, or seeking to simplify 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, fill out our online form, or call us at 877-930-401(k) to get started.
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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.
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What is a 401(k) Audit?
A 401(k) audit is an yearly review necessary for Moreno Valley, CA companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively contributing to the plan, you still need 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 assesses the plan’s overall financial health, ensuring that employee contributions, withdrawals, and operations are properly documented.
While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital supports Moreno Valley, CA businesses get ready for these audits by assisting with document collection, ensuring comprehension of compliance testing, etc... With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Moreno Valley, CA Companies?
You need to undergo a 401(k) audit for a variety of 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: Audits ensure that your 401(k) plan adheres to 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 known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, withdrawals, or other facets of plan oversight, enabling you to resolve these issues to avoid penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a required document detailing 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 do not exceed IRS contribution limits, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Moreno Valley, CA 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 in compliance with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Moreno Valley, CA 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 most detailed audit required for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, such as financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, withdrawls, and other transactions to ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these apply 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 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 better alternative for some Moreno Valley, CA businesses, if they satisfy the criteria.
The type of audit you need depends on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan requires and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Moreno Valley, CA Employers
While 401(k) audits are necessary for compliance, they often present significant challenges for Moreno Valley, CA employers, especially those managing larger plans. Below are several common challenges that companies deal with:
- 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 sort through and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance errors can lead to audit failures, sanctions, and costly corrections down the line.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees involves detailed compliance reviews and can lead to additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others out of their core responsibilities, adding strain and shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is a key component of 401(k) compliance. Late submissions could cause penalties and create further issues for the company.
At Correct Capital, we are aware of the difficulties involved and provide tailored support to streamline the audit procedure in Moreno Valley, CA. Be it 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 Moreno Valley, CA employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans enable different employers to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Moreno Valley, CA businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs allow unrelated employers to join a shared 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 Moreno Valley, CA 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. Switching to these types of plans may be particularly attractive for small companies in Moreno Valley, CA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Moreno Valley, CA 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance changes everything. Collaborating with experts that understands both the technical and practical aspects of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A skilled team will be familiar with the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We will assist you with the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team ensures you keep up 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 grasp the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, and represents 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: 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 freedom to concentrate on other tasks. Correct Capital makes the process smoother, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an audit specific to your plan is no longer necessary, you're still obligated to adhere to all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Working with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Moreno Valley, CA goes as smoothly as possible. With Correct Capital by your side, you’ll be assured that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Moreno Valley, CA
Adhering to 401(k) audit regulations is both a regulatory obligation and an opportunity to ensure your Moreno Valley, CA company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Moreno Valley, CA businesses through the 401(k) audit helps ease the burden, enabling you to concentrate on your operations while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to book a meeting and let us help you ensure your audit goes smoothly and efficiently. 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 Moreno Valley, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.