401(k) Audit Services in Orlando, FL. For Orlando, FL businesses that offer retirement plans, navigating a 401(k) audit can feel like an uphill battle. Between regulation 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 can be made much easier and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can be a major source of stress and cannot be avoided. Our team will assist you for everything from document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Orlando, FL, or looking to streamline a previously inefficient process, we're here to ensure it’s as smooth and easy 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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About 401(k) Audits
A 401(k) audit is an annual review mandated for Orlando, FL companies with 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 still need an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan follows 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, distributions, and plan activities are faithfully recorded.
While necessary to meet legal requirements, 401(k) audits can be complex and lengthy. Correct Capital supports Orlando, FL businesses navigate these audits by assisting with document collection, assisting with understanding compliance testing, etc... With the right support, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Orlando, FL Companies?
You are required to undergo a 401(k) audit for several reasons, ensuring that retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- 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, 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 fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in employee contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues before they result in penalties.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, an annual report that outlines 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 limits for the year, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to verify they are reasonable and not overly expensive for participants. Overpriced fees could lead to compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Orlando, FL employers are acting in the best interest of plan participants, fulfilling their fiduciary responsibilities as mandated by 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 main categories of 401(k) audits that Orlando, FL employers may encounter, 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 more comprehensive audit required for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, including financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these apply to plans with investments managed 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 substantially lower the audit’s complexity and cost. This can make it a more attractive option for some Orlando, FL businesses, provided they meet the criteria.
The specific audit required is determined by your plan’s specific details, such as the nature of its investments. At Correct Capital, we are able to assist you determine which type of audit your plan needs and make sure you're ready for either process.
401(k) Audit Pain Points for Orlando, FL Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Orlando, FL employers, especially those running bigger 401(k) plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers frequently have difficulties to organize and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations is difficult. Compliance missteps can cause audit failures, fines, and costly corrections later on.
- Discrimination Testing: Making sure 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 off of their core responsibilities, adding strain and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is essential to 401(k) compliance. Missing the deadline may lead to penalties and complicate things for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to streamline the audit procedure in Orlando, FL. From assisting with document collection or verifying adherence to regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Orlando, FL employers hoping to ease the workload of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. 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 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 permits Orlando, FL businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure simplifies compliance and lowers expenses, making it attractive for Orlando, FL businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Moving to one of these plans may be especially appealing to smaller businesses in Orlando, FL, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Orlando, FL 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can make all the difference. 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 working with the right specialists is crucial:
- 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 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: Every 401(k) plan is different. An experienced team will partner with you to identify the unique needs of your plan and assist you in getting ready 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, giving us the expertise to handle any company 401(k) plan.
- Saving Time and Resources: Audit preparation can consume a lot of time from day-to-day operations. The proper team will take on much of the administrative burden, 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 in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an separate audit is not required, 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 well-informed, reliable team is key to ensuring your 401(k) audit in Orlando, FL runs efficiently and stress-free. With Correct Capital by your side, you’ll be assured that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Orlando, FL
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to ensure your Orlando, FL company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Orlando, FL businesses through the 401(k) audit lightens the load, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to book a meeting and we'll guide you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Orlando, FL advisor team, contact us online, or call us at 877-930-401(k) to get started.
