401(k) Audit Services in Pittsburgh, PA. For Pittsburgh, PA businesses offering their employees retirement plans, completing a 401(k) audit can seem like a daunting task. Between compliance requirements 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 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 cannot be avoided. Our team will assist you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Pittsburgh, PA, or looking to streamline a previously cumbersome process, we're here to ensure it’s as smooth and easy 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.
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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 annual review mandated for Pittsburgh, PA companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have 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 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 necessary for compliance, 401(k) audits can be complex and demanding. Correct Capital helps Pittsburgh, PA businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, as well as other audit processes. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Pittsburgh, PA Companies?
You need to undergo a 401(k) audit for several reasons, to ensure retirement plans adhere to federal regulations and protect 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 complies with 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 ensures that the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or additional plan operations, enabling you to resolve these issues to avoid penalties.
- 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, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS contribution limits, reducing the risk of excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and don’t pose an excessive cost for participants. Overpriced fees could lead to compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Pittsburgh, PA employers are working to benefit 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 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 Pittsburgh, PA employers may encounter, 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 third-party auditor evaluates all components of the plan, including financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, withdrawls, and other transactions to verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these apply to plans with investments overseen 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 required to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a more attractive option for some Pittsburgh, PA businesses, if they satisfy the criteria.
The specific audit required depends on your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan requires and help you be well-prepared for either process.
401(k) Audit Pain Points for Pittsburgh, PA Employers
While 401(k) audits must be conducted to ensure compliance, they often present significant challenges for Pittsburgh, PA employers, especially those offering bigger 401(k) plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to organize and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance missteps can result in audit failures, penalties, and expensive fixes later on.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit draws HR professionals, business owners, administrators, and others off of their core responsibilities, heightening pressure and shifting focus from regular business activities.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, 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 understand these challenges and provide tailored support to make the audit process in Pittsburgh, PA smoother. 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 Pittsburgh, PA employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans allow unrelated employers to join a single 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 allows Pittsburgh, PA businesses to share the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to enter a unified 401(k) plan managed by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it appealing for Pittsburgh, PA 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. Moving to one of these plans may be especially appealing to smaller businesses in Pittsburgh, PA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Pittsburgh, PA 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place changes everything. Collaborating with experts that is well-versed in both the technicalities and practicalities 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 will be familiar with the details of 401(k) audits, covering both 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 will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. 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, 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 proper team will shoulder a lot of the admin work, allowing your HR and finance teams to focus on other priorities. Correct Capital helps streamline the process, easing the load for 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, just with less administrative burdens after plan year end.
*as of March 2024
Partnering with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Pittsburgh, PA goes as smoothly as possible. With Correct Capital by your side, you’ll be assured that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Pittsburgh, PA
Complying with 401(k) audits is both a mandatory process and an important way to confirm your Pittsburgh, PA company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Pittsburgh, PA businesses navigate the 401(k) audit lightens the load, letting you prioritize your business while preventing penalties for non-compliance.
Contact Correct Capital today to book a meeting and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will assist with everything 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 Pittsburgh, PA advisor team, contact us online, or call us at 877-930-401(k) to begin.
