401(k) Audit Services in Plano, TX. For Plano, TX 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, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, there is a lot to keep track of. However, with the right support, the 401(k) audit can be made much easier and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they are a regulatory requirement. 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 navigating your first audit in Plano, TX, or seeking to simplify a previously inefficient 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, fill out our online form, or call us at 877-930-401(k) to get started.
About 401(k) Audits
A 401(k) audit is an annual review mandated for Plano, TX companies with 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 are still required to have an audit if there are 100 who are eligible. The audit ensures that the retirement plan follows 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 employee contributions, distributions, and plan activities are properly documented.
While necessary for compliance, 401(k) audits can be complicated and demanding. Correct Capital helps Plano, TX businesses navigate these audits by aiding in document collection, ensuring comprehension of compliance testing, etc... With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Plano, TX 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 you need them:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements established by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in contributions, distributions, or other aspects of plan management, allowing you to correct these issues before they result in fines.
- Filing Form 5500: The audit confirms the accurate and on-time filing 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 do not exceed IRS limits for the year, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Plano, TX employers are working to benefit 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 in compliance 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 Plano, TX 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 more comprehensive audit necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor reviews all aspects of the plan, which includes financial statements, adherence to 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 called 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 obligated to audit the investment information certified by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a better alternative for some Plano, TX businesses, as long as they meet the criteria.
The kind of audit your plan needs is based 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 Plano, TX Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Plano, TX employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points 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 frequently have difficulties to sort through and file the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with changing DOL, IRS, and ERISA regulations can be challenging. Compliance oversights can result in audit failures, penalties, and pricey amendments down the line.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit draws HR professionals, business owners, administrators, and others out of their core responsibilities, adding strain and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which plays a critical role in 401(k) compliance. Missing the deadline may lead to penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to make the audit process in Plano, TX smoother. From assisting with document collection or ensuring compliance 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 Plano, TX employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans enable different employers to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup enables Plano, TX businesses to distribute the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs allow unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and lowers expenses, making it a desirable option for Plano, TX businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while still ensuring compliance with federal regulations. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Plano, TX, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Plano, TX 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance changes everything. Collaborating with experts that is well-versed in both the technicalities and practicalities of the audit process reduces the time and pressure you face. Here’s why partnering with the right experts matters:
- Experience and Expertise: A skilled team is knowledgeable about the complexities of 401(k) audits, encompassing full-scope and limited-scope audits. We can guide you through the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to understand 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, 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: Audit preparation can take considerable time away from day-to-day operations. The ideal support will handle most of the administrative tasks, enabling your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire process, reducing the pressure on 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 responsible for following all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Plano, TX is as painless as possible. With Correct Capital as your partner, you’ll be assured that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Plano, TX
Adhering to 401(k) audit regulations is both a mandatory process and an opportunity to verify your Plano, TX company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Plano, TX businesses navigate the 401(k) audit reduces the strain, enabling you to concentrate on your operations while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will support you with everything, including document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Plano, TX advisor team, contact us online, or call us at 877-930-401(k) to get started.
