401(k) Audit Services in Reno, NV. For Reno, NV businesses offering their employees retirement plans, navigating a 401(k) audit can feel like a challenging process. 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 doesn’t have to feel like a burden and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are mandatory. Our team will partner with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Reno, NV, or looking to streamline a process that's usually a burden, we're here to minimize the hassle. You can ask for 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.
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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 necessary for Reno, NV companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you are still required to have an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan adheres to the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s overall financial health, ensuring that employee contributions, distributions, and operations are faithfully recorded.
While necessary for compliance, 401(k) audits can be challenging and time-consuming. Correct Capital assists Reno, NV businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, and other related tasks. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Reno, NV Companies?
You are required to undergo a 401(k) audit for several reasons, ensuring that 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: The purpose of audits is to confirm that your 401(k) plan complies with all legal requirements mandated by the Department of Labor (DOL) and the IRS, especially under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues so they don't lead to penalties.
- Filing Form 5500: The audit confirms proper and timely submission of Form 5500, a required document detailing the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions do not exceed IRS contribution limits, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and hurt the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit ensures that Reno, NV employers are serving the interests of 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 aligned with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two main categories of 401(k) audits that Reno, NV employers might come across, based on the specific details 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 more comprehensive audit required for most larger 401(k) plans. In a full-scope audit, the external 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 evaluates supporting documentation for contributions, withdrawls, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called 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 be eligible 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 substantially lower the audit’s complexity and cost. This can make it a more attractive option for some Reno, NV businesses, if they satisfy the criteria.
The specific audit required depends on your plan’s particular characteristics, including the nature of its investments. At Correct Capital, we can help you determine which type of audit your plan is subject to and make sure you're ready for either process.
401(k) Audit Pain Points for Reno, NV Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Reno, NV employers, especially those managing larger plans. Below are several common challenges that companies deal with:
- Document Collection and Management: Collecting the right documents, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to sort through and file the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations can be challenging. Compliance errors can cause audit failures, fines, and pricey amendments in the long run.
- Discrimination Testing: Making sure that the plan isn’t top-heavy requires careful compliance checks and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit takes HR professionals, business owners, administrators, and others off of their core responsibilities, increasing stress and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Failing to meet the submission date may lead to penalties and complicate things for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to streamline the audit procedure in Reno, NV. 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 Reno, NV employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans enable different employers to join a single 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, reducing the cost and complexity of managing and auditing individual plans. This setup allows Reno, NV businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it appealing for Reno, NV businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Reno, NV, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Reno, NV 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support changes everything. Partnering with professionals 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, including both full-scope and limited-scope audits. We can guide you through the documentation process and pinpoint potential improvements 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: All 401(k) plans are distinct. An experienced team will partner with you to identify the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital handles more than 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: Preparing for a 401(k) audit can consume a lot of time from day-to-day operations. The ideal support will handle most of the administrative tasks, giving your HR and finance teams to focus on other priorities. Correct Capital helps streamline the process, taking the stress off 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, just with less administrative burdens after plan year end.
*as of March 2024
Partnering with a well-informed, reliable team is essential to making sure your 401(k) audit in Reno, NV 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 Reno, NV
Complying with 401(k) audits is both a mandatory process and an opportunity to ensure your Reno, NV company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Reno, NV businesses through the 401(k) audit reduces the strain, enabling you to concentrate on your operations while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to schedule a consultation and we'll guide 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 Reno, NV advisor team, contact us online, or call us at 877-930-401(k) to begin.