401(k) Audit Services in San Bernardino, CA. For San Bernardino, CA businesses offering their employees retirement plans, navigating a 401(k) audit can feel 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 favor 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 cause considerable frustration and cannot be avoided. Our team will partner with you with every aspect of document collection through making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in San Bernardino, CA, or hoping to optimize 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.
Schedule a Meeting With an Advisor Today
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.
Schedule a 15-Minute Introductory Call
About 401(k) Audits
A 401(k) audit is an yearly review necessary for San Bernardino, CA companies who have 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 still need an audit if there are 100 who are eligible. 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 reviews the plan’s overall financial health, ensuring that employee contributions, distributions, and plan activities are faithfully recorded.
While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital supports San Bernardino, CA businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, and other related tasks. With the right support, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for San Bernardino, CA Companies?
You need to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans remain compliant with federal regulations and protect both the employer and employees. Here’s why they are necessary:
- 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, with emphasis 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 referred to as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or other aspects of plan management, allowing you to correct these issues before they result in fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, an annual report detailing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions do not exceed IRS limits for the year, preventing excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that San Bernardino, CA employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is a critical part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that San Bernardino, CA 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 thorough audit mandated for most larger 401(k) plans. In a full-scope audit, the third-party auditor examines every part 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 referred to 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 be eligible for a limited-scope audit. In this type, the auditor does not need to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This can make it a better alternative for some San Bernardino, CA businesses, as long as they meet the criteria.
The kind of audit your plan needs is based on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we can help you determine which type of audit your plan requires and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for San Bernardino, CA Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for San Bernardino, CA employers, especially those overseeing more substantial retirement plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers often struggle to organize and deliver the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with shifting DOL, IRS, and ERISA regulations is difficult. Compliance missteps can cause audit failures, penalties, and pricey amendments in the long run.
- 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: Audit preparation pulls HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and distracting them from day-to-day operations.
- 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. Late submissions can result in penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and deliver personalized help to make the audit process in San Bernardino, CA more efficient. Be it document collection or confirming conformity 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 San Bernardino, CA employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans enable different employers to consolidate into one 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup allows San Bernardino, CA businesses to divide the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it a desirable option for San Bernardino, CA businesses looking to streamline 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 San Bernardino, CA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right San Bernardino, CA 401(k) Audit Team
401(k) audits can appear challenging, but having the right team in place changes everything. Collaborating with experts that has a firm grasp of both technical and practical elements of the audit process can save you significant time and stress. Here’s why working with the right specialists is crucial:
- Experience and Expertise: A team of experts understands the details of 401(k) audits, encompassing full-scope and limited-scope audits. We will assist you with the documentation process and help identify areas of improvement 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 collaborate with you to grasp the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital is responsible for managing 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: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The proper team will take on much of the administrative burden, enabling your HR and finance teams to focus on other priorities. Correct Capital makes the process smoother, easing the load for 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
Working with a experienced, reliable team is key to ensuring your 401(k) audit in San Bernardino, CA runs efficiently and stress-free. With Correct Capital by your side, you’ll have the confidence that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in San Bernardino, CA
Adhering to 401(k) audit regulations is both a legal requirement and an important way to confirm your San Bernardino, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting San Bernardino, CA businesses navigate the 401(k) audit lightens the load, allowing you to focus on your business while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and allow us to assist you get ready for a streamlined, effective audit. Our team of experts will assist with everything from document collection to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our San Bernardino, CA advisor team, contact us online, or call us at 877-930-401(k) to start the process.