401(k) Audit Services in Overland Park, KS. For Overland Park, KS businesses offering their employees retirement plans, navigating a 401(k) audit can feel like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, 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 does not need to disrupt your business and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration and cannot be avoided. Our team will work with you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Overland Park, KS, or hoping to optimize a previously cumbersome process, we're here to minimize the hassle. You can schedule 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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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 Overland Park, KS companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you must still undergo an audit if there are 100 who are eligible. The audit confirms 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 employee contributions, distributions, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital assists Overland Park, KS businesses navigate these audits by assisting with document collection, assisting with understanding compliance testing, and other related tasks. With an experienced team by your side, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Overland Park, KS 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: A 401(k) audit guarantees 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 checks if the plan isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in employee contributions, distributions, or other aspects of plan management, allowing you to correct these issues so they don't lead to fines.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a required document that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions remain 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. High fees can raise compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Overland Park, KS 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 aligned with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Overland Park, KS employers could face, 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 thorough audit necessary for most larger 401(k) plans. In a full-scope audit, the external auditor examines every part of the plan, such as 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 verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as 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 is not obligated to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a more attractive option for some Overland Park, KS businesses, provided they meet the criteria.
The specific audit required is determined by your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan needs and help you be well-prepared for both audit types.
401(k) Audit Pain Points for Overland Park, KS Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Overland Park, KS employers, notably those overseeing more substantial retirement plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Gathering the necessary paperwork, such as account statements, tax returns, and employee data, can be a lengthy process. Employers often struggle to arrange and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can result in audit failures, sanctions, and pricey amendments down the line.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others off 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. Missing the deadline can result in penalties and complicate things for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to make the audit process in Overland Park, KS less stressful. Be it document collection or confirming conformity 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 Overland Park, KS employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans enable different employers to join a single 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 allows Overland Park, KS 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 participate in a collective 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and reduces costs, making it a desirable option for Overland Park, KS businesses looking to streamline 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 Overland Park, KS, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Overland Park, KS 401(k) Audit Team
401(k) audits can seem difficult, but having the right team in place can make all the difference. Partnering with professionals 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 understands the complexities 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 will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to understand 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Preparing for a 401(k) audit can consume a lot of time from day-to-day operations. The ideal support will handle most of the administrative tasks, giving your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, easing the load for 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 obligated to adhere to all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Partnering with a well-informed, reliable team is essential to making sure your 401(k) audit in Overland Park, KS goes as smoothly as possible. With Correct Capital supporting you, 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 Overland Park, KS
Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to ensure your Overland Park, KS company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s expertise in guiding Overland Park, KS businesses through the 401(k) audit helps ease the burden, allowing you to focus on your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and allow us to assist you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Overland Park, KS advisor team, contact us online, or call us at 877-930-401(k) to begin.
