401(k) Audit Services in Pembroke Pines, FL. For Pembroke Pines, FL businesses that offer retirement plans, navigating a 401(k) audit can seem like an uphill battle. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, 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 and 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 preparing for your first audit in Pembroke Pines, FL, or seeking to simplify a process that's usually a burden, we're here to make it as simple and stress-free as possible. You can book a meeting with a member of our advisor team, contact us online, or call us at 877-930-401(k) to get started.
Schedule a Meeting With an Advisor Today
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.
Schedule a 15-Minute Introductory Call
More From Correct Capital Wealth Management
Explore how Correct Capital Wealth Management can help guide you toward smarter decisions, clearer goals, and lasting financial success.
Subscribe To Our Newsletter Listen To Our Podcast Watch Our YouTube Channel
What is a 401(k) Audit?
A 401(k) audit is an yearly review mandated for Pembroke Pines, FL companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively participating in the plan, you still need an audit if there are 100 who are eligible. The audit confirms that the retirement plan complies with the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that contributions, withdrawals, and operations are properly documented.
While necessary to meet legal requirements, 401(k) audits can be complex and lengthy. Correct Capital helps Pembroke Pines, FL businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, and other related tasks. With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Pembroke Pines, FL Companies?
You must undergo a 401(k) audit for multiple purposes, ensuring that retirement plans adhere to 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 follows all legal requirements mandated by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan disproportionately benefits higher-paid employees (often referred to as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or other aspects of plan management, enabling you to resolve these issues before they result in penalties.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a yearly filing summarizing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions stay within IRS limits for the year, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to verify they are reasonable and not overly expensive for participants. Overpriced fees could lead to compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Pembroke Pines, FL employers are serving the interests of plan participants, meeting their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Pembroke Pines, FL employers may encounter, based on the specific details 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 most detailed audit required for most larger 401(k) plans. In a full-scope audit, the external auditor examines every part of the plan, including 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: Previously called a "Limited Scope Audit," these pertain to plans with investments overseen 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 endorsed by the financial institution, which can substantially lower the audit’s complexity and cost. This may make it a better alternative for some Pembroke Pines, FL businesses, as long as they meet the criteria.
The kind of audit your plan needs is determined by your plan’s unique features, like the nature of its investments. At Correct Capital, we will guide you to determine which type of audit your plan requires and help you be well-prepared for either process.
401(k) Audit Pain Points for Pembroke Pines, FL Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Pembroke Pines, FL employers, notably those offering bigger 401(k) plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to arrange and deliver the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance errors can lead to audit failures, fines, and pricey amendments down the line.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit takes HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Failing to meet the submission date may lead to penalties and create further issues for the company.
At Correct Capital, we recognize these obstacles and deliver personalized help to streamline the audit procedure in Pembroke Pines, FL. 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 Pembroke Pines, FL employers hoping to ease the workload of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can provide solutions. These plans allow unrelated employers to consolidate into one 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup permits Pembroke Pines, FL businesses to share 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 administered by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it appealing for Pembroke Pines, FL businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be particularly attractive for small companies in Pembroke Pines, FL, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Pembroke Pines, FL 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place can make all the difference. Working with a team that understands both the technical and practical aspects 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 is knowledgeable about the complexities 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, 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, representing 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: Getting ready for a 401(k) audit can distract you significantly from day-to-day operations. The ideal support will shoulder a lot of the admin work, giving your HR and finance teams to focus on other priorities. Correct Capital helps streamline the process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an individual plan audit is no longer necessary, 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
Collaborating with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Pembroke Pines, FL is as painless as possible. With Correct Capital by your side, you’ll have the confidence that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Pembroke Pines, FL
Complying with 401(k) audits is both a regulatory obligation and an important way to confirm your Pembroke Pines, FL company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Pembroke Pines, FL businesses navigate the 401(k) audit lightens the load, letting you prioritize your business while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will support you with everything, including document collection through to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Pembroke Pines, FL advisor team, contact us online, or call us at 877-930-401(k) to start the process.
