401(k) Audit Services in Peoria, AZ. For Peoria, AZ 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 interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they cannot be avoided. Our team will work with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Peoria, AZ, or looking to streamline a previously cumbersome 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, 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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About 401(k) Audits
A 401(k) audit is an annual review necessary for Peoria, AZ companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively contributing to the plan, you must still undergo an audit if there are 100 who have the option to participate if they wanted. The audit verifies that the retirement plan adheres to 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 operations are properly documented.
While necessary for compliance, 401(k) audits can be challenging and time-consuming. Correct Capital assists Peoria, AZ businesses navigate these audits by assisting with document collection, assisting with understanding compliance testing, etc... 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 Peoria, AZ Companies?
You need to undergo a 401(k) audit for several reasons, ensuring that retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: Audits ensure 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 verifies whether the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, withdrawals, or additional plan operations, allowing you to correct these issues so they don't lead to fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a yearly filing that outlines the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions remain within IRS limits for the year, reducing the risk of excess contributions that could lead to 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 negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Peoria, AZ employers are acting in the best interest of plan participants, satisfying 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 a critical part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Peoria, AZ employers might come across, 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 required for most larger 401(k) plans. In a full-scope audit, the third-party auditor reviews all aspects of the plan, including financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called a "Limited Scope Audit," these pertain 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 greatly lessen the audit’s complexity and cost. This can make it a more attractive option for some Peoria, AZ businesses, provided they meet the criteria.
The type of audit you need depends on your plan’s unique features, such as the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan is subject to and make sure you're ready for both audit types.
401(k) Audit Pain Points for Peoria, AZ Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Peoria, AZ employers, notably those offering bigger 401(k) plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to organize and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can lead to audit failures, fines, and costly corrections down the line.
- Discrimination Testing: Ensuring 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 away from their core responsibilities, increasing stress and diverting attention from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 properly and punctually, 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 are aware of the difficulties involved and deliver personalized help to streamline the audit procedure in Peoria, AZ. From assisting with document collection or confirming conformity 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 Peoria, AZ employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans permit various businesses to consolidate into one 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 Peoria, AZ businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs enable unrelated employers to join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and cuts costs, making it appealing for Peoria, AZ 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 particularly attractive for small companies in Peoria, AZ, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Peoria, AZ 401(k) Audit Team
401(k) audits can be daunting, but selecting the proper assistance can make all the difference. Working with a team that understands both the technical and practical aspects 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 team of experts understands 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 helps you remain up to date with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will work closely with you to understand 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, enabling us to understand the specifics of 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 handle most of the administrative tasks, enabling your HR and finance teams the freedom to concentrate on other tasks. Correct Capital helps streamline the process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an separate audit is no longer mandated, you're still required to comply with all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Working with a experienced, reliable team is key to ensuring your 401(k) audit in Peoria, AZ is as painless as possible. With Correct Capital supporting you, you’ll have the confidence that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Peoria, AZ
Complying with 401(k) audits is both a legal requirement and an important way to confirm your Peoria, AZ company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Peoria, AZ businesses complete the 401(k) audit reduces the strain, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will help with all aspects from document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Peoria, AZ advisor team, contact us online, or call us at 877-930-401(k) to get started.
