401(k) Audit Services in Rancho Cucamonga, CA. For Rancho Cucamonga, CA businesses that offer retirement plans, completing a 401(k) audit can seem like a daunting task. Between regulation from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan isn’t “top-heavy”, there are many factors to consider. However, with the right support, the 401(k) audit does not need to disrupt your business and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are a regulatory requirement. Our team will partner with you for everything from document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Rancho Cucamonga, CA, 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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What is a 401(k) Audit?
A 401(k) audit is an yearly review required for Rancho Cucamonga, CA companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively contributing to the plan, you still need an audit if there are 100 who have the option to participate if they wanted. The audit verifies that the retirement plan adheres to the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that contributions, distributions, and operations are properly documented.
While necessary to meet legal requirements, 401(k) audits can be challenging and lengthy. Correct Capital assists Rancho Cucamonga, CA businesses prepare for these audits by aiding in document collection, helping clarify 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 Rancho Cucamonga, CA Companies?
You are required to undergo a 401(k) audit for multiple purposes, to ensure retirement plans remain compliant 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 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) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, withdrawals, or other facets of plan oversight, enabling you to resolve these issues to avoid penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a yearly filing summarizing the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions do not exceed IRS limits for the year, helping to avoid 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. Excessive fees may prompt compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Rancho Cucamonga, CA employers are working to benefit plan participants, meeting their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are consistent 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 Rancho Cucamonga, CA employers may encounter, depending on the size and complexity 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 mandated 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 examines supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these pertain to plans with investments managed 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 substantially lower the audit’s complexity and cost. This could make it a preferable choice for some Rancho Cucamonga, CA businesses, as long as they meet the criteria.
The specific audit required is based on your plan’s unique features, like the nature of its investments. At Correct Capital, we are able to assist you determine which type of audit your plan requires and help you be well-prepared for both audit types.
401(k) Audit Pain Points for Rancho Cucamonga, CA Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Rancho Cucamonga, CA employers, notably those managing larger plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Collecting the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to arrange and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can cause audit failures, fines, and expensive fixes later on.
- Discrimination Testing: Making sure that the plan isn’t top-heavy demands thorough checks for compliance and can result in additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress and diverting attention from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which is a key component of 401(k) compliance. Failing to meet the submission date could cause 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 Rancho Cucamonga, CA more efficient. From assisting with document collection or verifying adherence to regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Rancho Cucamonga, CA employers hoping to ease the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans permit various businesses to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup enables Rancho Cucamonga, CA businesses to share the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs enable 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 a desirable option for Rancho Cucamonga, CA 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. Switching to these types of plans may be particularly attractive for small companies in Rancho Cucamonga, CA, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Rancho Cucamonga, CA 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance changes everything. Partnering with professionals that understands both the technical and practical aspects 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 highly experienced group is knowledgeable about the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We will assist you with the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. An experienced team will collaborate with you to identify 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, and represents over $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: Getting ready for a 401(k) audit can consume a lot of time from day-to-day operations. The ideal support will take on much of the administrative burden, allowing your HR and finance teams the ability to address other important matters. Correct Capital makes the process smoother, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses participating 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
Collaborating with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Rancho Cucamonga, CA goes as smoothly as possible. With Correct Capital by your side, you’ll feel secure that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Rancho Cucamonga, CA
Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to verify your Rancho Cucamonga, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Rancho Cucamonga, CA businesses complete the 401(k) audit lightens the load, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you prepare for a smooth, efficient audit. Our team of experts will help with all aspects from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Rancho Cucamonga, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.