401(k) Audit Services in New Orleans, LA. For New Orleans, LA businesses offering their employees retirement plans, completing a 401(k) audit can feel like a daunting task. Between compliance requirements 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, it can be overwhelming. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration and are mandatory. Our team will work with you for everything from document collection through meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in New Orleans, LA, or looking to streamline a previously inefficient 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, fill out our online form, or call us at 877-930-401(k) to get started.
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What is a 401(k) Audit?
A 401(k) audit is an annual review required for New Orleans, LA companies who have 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 are still required to have an audit if there are 100 who are eligible. The audit confirms that the retirement plan adheres to the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s overall financial health, ensuring that employee contributions, withdrawals, and plan activities are properly documented.
While necessary for compliance, 401(k) audits can be challenging and lengthy. Correct Capital helps New Orleans, LA businesses prepare for these audits by helping with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team by your side, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for New Orleans, LA Companies?
You are required to undergo a 401(k) audit for multiple purposes, to ensure retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan adheres to all legal requirements set by the Department of Labor (DOL) and the IRS, particularly 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 referred to as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues before they result in fines.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, a required document 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 contribution limits, preventing excess contributions that could lead to 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 affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that New Orleans, LA employers are serving the interests 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 aligned with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that New Orleans, LA employers may encounter, depending on factors such as the size and nature 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 third-party 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 reviews supporting documentation for contributions, withdrawls, and other transactions to ensure accuracy and compliance.
- 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 does not need to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This may make it a more attractive option for some New Orleans, LA 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 will guide you to determine which type of audit your plan needs and ensure you're fully prepared for either process.
401(k) Audit Pain Points for New Orleans, LA Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for New Orleans, LA employers, especially those running bigger 401(k) 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 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: Keeping pace with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance missteps can lead to audit failures, penalties, and costly corrections in the long run.
- Discrimination Testing: Verifying 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: Audit preparation pulls HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and shifting focus from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Failing to meet the submission date could cause penalties and cause additional problems for the company.
At Correct Capital, we understand these challenges and offer customized assistance to streamline the audit procedure in New Orleans, LA. 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 New Orleans, LA employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can provide solutions. These plans permit various businesses to participate in a unified 401(k) plan, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup enables New Orleans, LA businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs permit unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and lowers expenses, making it appealing for New Orleans, LA businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while still ensuring compliance with federal regulations. Moving to one of these plans may be highly beneficial for smaller firms in New Orleans, LA, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right New Orleans, LA 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance can greatly improve the process. Collaborating with experts that has a firm grasp of both technical and practical elements 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 highly experienced group is knowledgeable about the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We will assist you with the documentation process and pinpoint potential improvements 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 collaborate with you to grasp the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital handles more than 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: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The proper team will handle most of the administrative tasks, enabling 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 mandated, you're still required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a experienced, reliable team is essential to making sure your 401(k) audit in New Orleans, LA runs efficiently and stress-free. With Correct Capital as your partner, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in New Orleans, LA
Adhering to 401(k) audit regulations is both a regulatory obligation and an opportunity to verify your New Orleans, LA company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding New Orleans, LA businesses navigate the 401(k) audit helps ease the burden, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and we'll guide 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 New Orleans, LA advisor team, contact us online, or call us at 877-930-401(k) to begin.
