401(k) Audit Services in Richmond, VA. For Richmond, VA businesses that offer retirement plans, completing a 401(k) audit can feel like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't disproportionately benefit higher-paid employees, it can be overwhelming. 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 create significant headaches even though they are a regulatory requirement. Our team will work with you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Richmond, VA, or looking to streamline a previously cumbersome 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, 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 required for Richmond, VA 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 have the option to participate if they wanted. The audit ensures that the retirement plan follows the regulations set 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, withdrawals, and plan activities are faithfully recorded.
While necessary to meet legal requirements, 401(k) audits can be complex and time-consuming. Correct Capital helps Richmond, VA businesses get ready for these audits by aiding in document collection, assisting with understanding compliance testing, etc... With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Richmond, VA Companies?
You are required to undergo a 401(k) audit for multiple purposes, ensuring that retirement plans stay in line with federal regulations and safeguard both the employer and employees. Here’s why they are required:
- 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, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan does not unfairly favor higher-paid employees (often known as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, withdrawals, or other facets of plan oversight, allowing you to correct these issues to avoid penalties.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, an annual report that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions stay within IRS limits for the year, preventing excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Richmond, VA employers are acting in the best interest 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 primary types of 401(k) Audits that Richmond, VA employers might come across, 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, 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 verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Formerly known as a "Limited Scope Audit," these pertain to plans with investments held by a qualified, regulated financial institution (such as a bank or insurance company). The employer may take advantage of a limited-scope audit. In this type, the auditor is not obligated to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a preferable choice for some Richmond, VA businesses, if they satisfy the criteria.
The type of audit you need is based on your plan’s particular characteristics, 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 Richmond, VA Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Richmond, VA employers, particularly those offering bigger 401(k) plans. These are some of the major issues that businesses face:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers often struggle to sort through and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance errors can lead to audit failures, penalties, and expensive fixes down the line.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit pulls HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and diverting attention from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is essential to 401(k) compliance. Failing to meet the submission date could cause penalties and create further issues for the company.
At Correct Capital, we recognize these obstacles and deliver personalized help to make the audit process in Richmond, VA less stressful. Whether it’s helping with document collection or confirming conformity with regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Richmond, VA employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans enable different employers to participate in a unified 401(k) plan, often eliminating 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 enables Richmond, VA 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 enter a unified 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and lowers expenses, making it appealing for Richmond, VA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be particularly attractive for small companies in Richmond, VA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Richmond, VA 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place can make all the difference. Working with a team 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, 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 helps you remain up to date with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will work closely with you to identify the unique needs of your plan and guide you in preparing for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, and represents 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 take considerable time away from day-to-day operations. The ideal support will shoulder a lot of the admin work, allowing your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is no longer necessary, you're still required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Partnering with a experienced, reliable team is crucial for guaranteeing your 401(k) audit in Richmond, VA runs efficiently and stress-free. With Correct Capital supporting you, 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 Richmond, VA
Complying with 401(k) audits is both a mandatory process and an important way to confirm your Richmond, VA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Richmond, VA businesses complete the 401(k) audit reduces the strain, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you ensure your audit goes smoothly and efficiently. Our team of experts will support you with everything, including document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Richmond, VA advisor team, contact us online, or call us at 877-930-401(k) to get started.
