401(k) Audit Services in Santa Ana, CA. For Santa Ana, CA businesses that offer retirement plans, navigating a 401(k) audit can feel like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, 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 interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. Our team will partner with you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Santa Ana, CA, or looking to streamline a previously cumbersome process, we're here to ensure it’s as smooth and easy 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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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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About 401(k) Audits
A 401(k) audit is an annual review mandated for Santa Ana, CA companies who have at least 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively enrolled in the plan, you must still undergo an audit if there are 100 who are eligible. The audit confirms that the retirement plan complies with the regulations set by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s financial integrity, ensuring that contributions, distributions, and plan activities are properly documented.
While necessary for compliance, 401(k) audits can be complex and lengthy. Correct Capital helps Santa Ana, CA businesses get ready for these audits by helping with document collection, assisting with understanding compliance testing, etc... With an experienced team in your corner, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Santa Ana, CA Companies?
You are required to undergo a 401(k) audit for a variety of reasons, to ensure retirement plans stay in line with federal regulations and protect both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan complies with all legal requirements mandated by the Department of Labor (DOL) and the IRS, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, withdrawals, or additional plan operations, enabling you to resolve these issues so they don't lead to penalties.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, an annual report 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 stay within IRS limits for the year, reducing the risk of excess contributions that could lead to 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 Santa Ana, CA employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Verifying 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 primary types of 401(k) Audits that Santa Ana, CA employers could face, 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 required for most larger 401(k) plans. In a full-scope audit, the third-party auditor examines every part of the plan, including financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines 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 overseen 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 does not need to audit the investment information verified by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a preferable choice for some Santa Ana, CA businesses, if they satisfy the criteria.
The kind of audit your plan needs is determined by your plan’s specific details, including 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 Santa Ana, CA Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Santa Ana, CA employers, especially those managing larger plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Gathering the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers may find it challenging to organize and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant 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: Getting ready for an audit draws HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and diverting attention from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Late submissions can result in penalties and cause additional problems for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to streamline the audit procedure in Santa Ana, CA. From assisting with document collection or verifying adherence to 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 Santa Ana, CA employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can provide solutions. 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, reducing the cost and complexity of managing and auditing individual plans. This setup enables Santa Ana, CA businesses to distribute the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs allow 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 Santa Ana, CA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Moving to one of these plans may be particularly attractive for small companies in Santa Ana, CA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Santa Ana, CA 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support can make all the difference. 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 working with the right specialists is crucial:
- Experience and Expertise: A skilled team is knowledgeable about the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We can guide you through 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 work closely with you to understand 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Getting ready for a 401(k) audit can distract you significantly from day-to-day operations. The proper team 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 in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an separate 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
Partnering with a experienced, reliable team is essential to making sure your 401(k) audit in Santa Ana, CA is as painless as possible. With Correct Capital supporting you, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Santa Ana, CA
Adhering to 401(k) audit regulations is both a regulatory obligation and an opportunity to ensure your Santa Ana, CA company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s knowledge of helping Santa Ana, CA businesses complete the 401(k) audit lightens the load, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you prepare for a smooth, efficient audit. Our team of experts will support you with everything, including document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Santa Ana, CA advisor team, contact us online, or call us at 877-930-401(k) to begin.
