401(k) Audit Services in Norfolk, VA. For Norfolk, VA businesses offering their employees retirement plans, completing a 401(k) audit can seem like an uphill battle. 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, there are many factors to consider. 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 cause considerable frustration even though they cannot be avoided. Our team will assist you with every aspect of document collection through making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Norfolk, VA, or hoping to optimize a previously inefficient process, we're here to ensure it’s as smooth and easy as possible. You can book 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 yearly review necessary for Norfolk, VA companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you lack 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 ensures that the retirement plan complies with the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s overall financial health, ensuring that contributions, withdrawals, and plan activities are faithfully recorded.
While required for regulatory purposes, 401(k) audits can be complex and time-consuming. Correct Capital assists Norfolk, VA businesses get ready for these audits by assisting with document collection, ensuring comprehension of compliance testing, and other related tasks. With the right support, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Norfolk, VA Companies?
You need to 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 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 checks if the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other facets of plan oversight, enabling you to resolve these issues to avoid fines.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a yearly filing detailing 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 contribution limits, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to verify they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Norfolk, VA employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Verifying 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 main categories of 401(k) audits that Norfolk, VA employers may encounter, depending on the size and complexity 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 necessary for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, which includes financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously called a "Limited Scope Audit," these are for plans with investments managed 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 certified by the financial institution, which can substantially lower the audit’s complexity and cost. This may make it a better alternative for some Norfolk, VA businesses, as long as they meet the criteria.
The kind of audit your plan needs is based on your plan’s specific details, including the nature of its investments. At Correct Capital, we are able to assist you determine which type of audit your plan is subject to and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Norfolk, VA Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Norfolk, VA employers, especially those overseeing more substantial retirement plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling 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, notably in the case of 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 cause audit failures, penalties, and pricey amendments in the long run.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy 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, increasing stress and shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which plays a critical role in 401(k) compliance. Late submissions could cause penalties and cause additional problems for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to make the audit process in Norfolk, VA more efficient. Be it document collection or verifying adherence to 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 Norfolk, VA employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans permit various businesses to join a single 401(k) plan, frequently removing 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 permits Norfolk, VA businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs allow unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it a desirable option for Norfolk, VA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Switching to these types of plans may be especially appealing to smaller businesses in Norfolk, VA, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Norfolk, VA 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance can make all the difference. 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 partnering with the right experts matters:
- Experience and Expertise: A team of experts will be familiar with the complexities of 401(k) audits, encompassing 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, confirming your plan adheres to all regulations.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will work closely 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, giving us the expertise to handle any company 401(k) plan.
- Saving Time and Resources: Preparing 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, allowing your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the process, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an separate audit is not required, 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
Working with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Norfolk, VA runs efficiently and stress-free. With Correct Capital supporting you, you’ll feel secure that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Norfolk, VA
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to ensure your Norfolk, VA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Norfolk, VA 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 prepare for a smooth, efficient audit. Our team of experts will assist with everything from document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Norfolk, VA advisor team, contact us online, or call us at 877-930-401(k) to begin.
