401(k) Audit Services in Phoenix, AZ. For Phoenix, AZ businesses that offer retirement plans, navigating a 401(k) audit can seem like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan isn’t “top-heavy”, there are many factors to consider. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and interfere with your company’s daily operations.

At Correct Capital, we understand that 401(k) audits can create significant headaches and are mandatory. Our team will work with you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Phoenix, AZ, or looking to streamline a process that's usually a burden, we're here to make it as simple and stress-free as possible. You can ask for 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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About 401(k) Audits

A 401(k) audit is an annual review mandated for Phoenix, AZ companies with more than 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 ensures that the retirement plan follows the regulations set 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 plan activities are accurately represented.

While required for regulatory purposes, 401(k) audits can be complex and time-consuming. Correct Capital supports Phoenix, AZ businesses prepare for these audits by helping 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 Phoenix, AZ Companies?

You are required to 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: The purpose of audits is to confirm that your 401(k) plan follows 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 disproportionately benefits higher-paid employees (often referred to as “top-heavy” testing) to ensure fairness across all participants.
  • Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other facets of plan oversight, allowing you to correct these issues before they result in fines.
  • Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, a required document summarizing the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
  • Contribution Limits: The audit verifies that employer and employee contributions stay within IRS limits for the year, helping to avoid excess contributions that could lead to penalties.
  • Fee Reasonableness: Auditors may examine plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Excessive fees may prompt compliance concerns and negatively impact the long-term growth of employee retirement savings.
  • Fiduciary Oversight: The audit verifies that Phoenix, AZ employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as required by ERISA.
  • Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is a vital part of the audit.

Types of 401(k) Audits

There are two kinds of 401(k) audits that Phoenix, AZ employers may encounter, 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 most detailed audit mandated for most larger 401(k) plans. In a full-scope audit, the third-party auditor evaluates all components of the plan, such as financial statements, conformance with 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 held by a qualified, regulated financial institution (such as a bank or insurance company). The employer may take advantage of a limited-scope audit. In this type, the auditor does not need to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This could make it a preferable choice for some Phoenix, AZ businesses, provided they meet the criteria.

The specific audit required is based on your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we are able to assist you understand which type of audit your plan needs and ensure you're fully prepared for both audit types.

401(k) Audit Pain Points for Phoenix, AZ Employers

While 401(k) audits are required to meet legal obligations, they often present significant challenges for Phoenix, AZ employers, especially those running bigger 401(k) plans. Below are several common challenges that companies deal with:

  • Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to organize and deliver the necessary paperwork, particularly with larger, more complex plans.
  • Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can lead to audit failures, sanctions, and pricey amendments later on.
  • Discrimination Testing: Verifying that the plan isn’t top-heavy involves detailed compliance reviews and can result in additional documentation and reporting.
  • Time and Resource Demands: Preparing for an audit draws HR professionals, business owners, administrators, and others off of their core responsibilities, heightening pressure and diverting attention from regular business activities.
  • 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. Failing to meet the submission date can result in penalties and create further issues for the company.

At Correct Capital, we are aware of the difficulties involved and deliver personalized help to streamline the audit procedure in Phoenix, AZ. From assisting with 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 Phoenix, AZ employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans allow unrelated employers to participate in a unified 401(k) plan, frequently removing 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 enables Phoenix, AZ businesses to share the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it attractive for Phoenix, AZ businesses seeking to simplify their retirement offerings.

Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while still ensuring compliance with federal regulations. Transitioning into an MEP or PEP may be particularly attractive for small companies in Phoenix, AZ, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.

Working with the Right Phoenix, AZ 401(k) Audit Team

401(k) audits can be daunting, but having the right team in place changes everything. Working with a team that understands both the technical and practical aspects of the audit process helps you avoid unnecessary delays and anxiety. Here’s why working with the right specialists is crucial:

  • Experience and Expertise: A highly experienced group will be familiar with the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We help you navigate the documentation process and help identify areas of improvement within your plan.
  • Compliance Assurance: The right team helps you remain up to date with 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 help you prepare for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, with more than $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 take considerable time away from day-to-day operations. The right partner will take on much of the administrative burden, enabling your HR and finance teams the freedom to concentrate on other tasks. Correct Capital makes the process smoother, easing the load for 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

Partnering with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Phoenix, AZ runs efficiently and stress-free. 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 Phoenix, AZ

Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to ensure your Phoenix, AZ company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Phoenix, AZ businesses navigate the 401(k) audit helps ease the burden, allowing you to focus on your business while ensuring you're not penalized 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 help with all aspects from 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 Phoenix, AZ advisor team, contact us online, or call us at 877-930-401(k) to begin.


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