401(k) Audit Services in Portland, OR. For Portland, OR businesses offering their employees retirement plans, navigating a 401(k) audit can feel like an uphill battle. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, 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 and cannot be avoided. Our team will partner with you with every aspect of document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Portland, OR, or hoping to optimize a previously cumbersome process, we're here to make it as simple and stress-free 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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About 401(k) Audits
A 401(k) audit is an annual review required for Portland, OR companies with at least 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 are still required to have an audit if there are 100 who are eligible. The audit verifies that the retirement plan complies with the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s overall financial health, ensuring that contributions, withdrawals, and plan activities are properly documented.
While required for regulatory purposes, 401(k) audits can be challenging and lengthy. Correct Capital helps Portland, OR businesses navigate these audits by assisting with document collection, helping clarify compliance testing, and other related tasks. With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Portland, OR Companies?
You need to undergo a 401(k) audit for a variety of reasons, to ensure retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why they are required:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan adheres to all legal requirements set by the Department of Labor (DOL) and the IRS, with emphasis 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) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, withdrawals, or other facets of plan oversight, enabling you to resolve 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, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions do not exceed IRS limits for the year, preventing excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Portland, OR employers are serving the interests of plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are aligned with regulatory guidelines is a critical part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Portland, OR 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 most detailed audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components of the plan, which includes 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 ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these are for plans with investments held 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 endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a better alternative for some Portland, OR businesses, provided they meet the criteria.
The kind of audit your plan needs is based on your plan’s specific details, like the nature of its investments. At Correct Capital, we are able to assist you determine which type of audit your plan requires and make sure you're ready for either process.
401(k) Audit Pain Points for Portland, OR Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Portland, OR employers, notably those managing larger plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Gathering the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle to arrange and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can cause audit failures, penalties, and expensive fixes later on.
- Discrimination Testing: Making sure 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 pulls HR professionals, business owners, administrators, and others off of their core responsibilities, increasing stress and diverting attention from everyday business tasks.
- 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. Failing to meet the submission date may lead to penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and provide tailored support to streamline the audit procedure in Portland, OR. 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 Portland, OR employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans allow unrelated employers 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 Portland, OR businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it appealing for Portland, OR businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Switching to these types of plans may be especially appealing to smaller businesses in Portland, OR, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Portland, OR 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place can make all the difference. Collaborating with experts that has a firm grasp of both technical and practical elements of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A skilled team will be familiar with the complexities of 401(k) audits, including both full-scope and limited-scope audits. We help you navigate 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: All 401(k) plans are distinct. An experienced team will partner with you to grasp the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital currently manages over 37 plans in both small and large companies, representing over $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 distract you significantly from day-to-day operations. The proper team will shoulder a lot of the admin work, giving your HR and finance teams the ability to address other important matters. Correct Capital simplifies the entire 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 no longer mandated, you're still responsible for following all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Portland, OR runs efficiently and stress-free. With Correct Capital by your side, 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 Portland, OR
Complying with 401(k) audits is both a mandatory process and an opportunity to ensure your Portland, OR company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Portland, OR businesses through 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 through to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Portland, OR advisor team, contact us online, or call us at 877-930-401(k) to begin.
