401(k) Audit Philadelphia, PA

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401(k) Audit Services in Philadelphia, PA. For Philadelphia, PA businesses offering their employees retirement plans, navigating a 401(k) audit can seem like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan doesn't favor higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit can be made much easier and interfere with your company’s daily operations.

At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. Our team will assist you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Philadelphia, PA, or seeking to simplify a previously cumbersome process, we're here to minimize the hassle. 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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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 required for Philadelphia, PA companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled in the plan, you still need an audit if there are 100 who are eligible. The audit verifies that the retirement plan follows the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that employee contributions, distributions, and operations are accurately represented.

While required for regulatory purposes, 401(k) audits can be challenging and demanding. Correct Capital supports Philadelphia, PA businesses get ready for these audits by helping with document collection, ensuring comprehension of compliance testing, and other related tasks. With the right support, getting through the audit can become a far more manageable task.

Why are 401(k) Audits Necessary for Philadelphia, PA Companies?

You are required to undergo a 401(k) audit for several reasons, to ensure retirement plans stay in line with federal regulations and protect 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 follows all legal requirements established 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 does not unfairly favor higher-paid employees (often called “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
  • Identifying Operational Issues: Audits often expose errors in employee contributions, distributions, or other facets of plan oversight, providing an opportunity to fix these issues before they result in fines.
  • Filing Form 5500: The audit guarantees proper and timely submission of Form 5500, a required document that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
  • Contribution Limits: The audit confirms that employer and employee contributions remain within IRS limits for the year, helping to avoid excess contributions that may result in penalties.
  • Fee Reasonableness: Auditors may examine plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and hurt the long-term growth of employee retirement savings.
  • Fiduciary Oversight: The audit confirms that Philadelphia, PA employers are working to benefit plan participants, fulfilling their fiduciary responsibilities as mandated by ERISA.
  • Verification of Plan Documentation: Confirming 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 Philadelphia, PA employers could face, 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 necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor reviews all aspects of the plan, such as financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, distributions, and other transactions to ensure accuracy and compliance.
  • Section 103(a)(3)(C)) Audit: Previously referred to as 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 does not need 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 Philadelphia, PA businesses, provided they meet the criteria.

The kind of audit your plan needs depends on your plan’s unique features, including the nature of its investments. At Correct Capital, we can help you figure out which type of audit your plan is subject to and help you be well-prepared for either process.

401(k) Audit Pain Points for Philadelphia, PA Employers

While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Philadelphia, PA employers, particularly those offering bigger 401(k) plans. Here are some of the key pain points that companies deal with:

  • Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers may find it challenging to organize and file 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 prove difficult. Compliance missteps can result in audit failures, penalties, and pricey amendments in the long run.
  • Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can necessitate additional documentation and reporting.
  • Time and Resource Demands: Getting ready for an audit takes HR professionals, business owners, administrators, and others off of their core responsibilities, heightening pressure and diverting attention from day-to-day operations.
  • Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 accurately and on time, which is essential to 401(k) compliance. Failing to meet the submission date may lead to penalties and create further issues for the company.

At Correct Capital, we are aware of the difficulties involved and offer customized assistance to make the audit process in Philadelphia, PA more efficient. From assisting with 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 Philadelphia, PA employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can provide solutions. These plans permit various businesses to participate in a unified 401(k) plan, often eliminating employer-specific audits.

  • Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Philadelphia, PA businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): Recently established, PEPs allow unrelated employers to join a shared 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and cuts costs, making it attractive for Philadelphia, PA businesses seeking to simplify their retirement offerings.

Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Switching to these types of plans may be especially appealing to smaller businesses in Philadelphia, PA, that want to provide a 401(k) but struggle with the costs and administrative burdens.

Working with the Right Philadelphia, PA 401(k) Audit Team

401(k) audits can appear challenging, 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 reduces the time and pressure you face. Here’s why working with the right specialists is crucial:

  • Experience and Expertise: A highly experienced group understands the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We can guide you through 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: Each 401(k) plan has unique requirements. An experienced team will work closely with you to grasp 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, giving us the expertise to handle 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 proper team will handle most of the administrative tasks, enabling your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, taking the stress off your internal team.
  • MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an individual plan audit is not required, you're still responsible for following all the rules and regulations, though with a reduced administrative workload after plan year end.

*as of March 2024

Partnering with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Philadelphia, PA goes as smoothly as possible. With Correct Capital supporting you, you’ll feel secure that your audit will be completed efficiently and accurately.

Call Correct Capital for Help With Your 401(k) Audit in Philadelphia, PA

Adhering to 401(k) audit regulations is both a legal requirement and an important way to confirm your Philadelphia, PA company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Philadelphia, PA businesses through the 401(k) audit reduces the strain, letting you prioritize your business while ensuring you're not penalized for non-compliance.

Contact Correct Capital today to schedule a consultation and let us help you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects from document collection to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Philadelphia, PA advisor team, contact us online, or call us at 877-930-401(k) to begin.


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