401(k) Audit Services in Seattle, WA. For Seattle, WA businesses offering their employees retirement plans, navigating a 401(k) audit can seem like a daunting task. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, there are many factors to consider. 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 are mandatory. Our team will assist you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Seattle, WA, or seeking to simplify 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, 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 yearly review mandated for Seattle, WA companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively participating in the plan, you are still required to have an audit if there are 100 who are eligible. The audit ensures that the retirement plan follows 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, withdrawals, and operations are properly documented.
While required for regulatory purposes, 401(k) audits can be complicated and lengthy. Correct Capital supports Seattle, WA businesses navigate these audits by assisting with document collection, helping clarify compliance testing, etc... With the right support, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Seattle, WA Companies?
You must undergo a 401(k) audit for a variety of reasons, to ensure retirement plans stay in line with federal regulations and safeguard both the employer and employees. Here’s why you need them:
- 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, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or other facets of plan oversight, allowing you to correct these issues to avoid penalties.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, a required document summarizing the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS contribution limits, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to ensure they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Seattle, WA employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Ensuring that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is a vital part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Seattle, WA employers could face, 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 necessary 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 examines supporting documentation for contributions, withdrawls, and other transactions to verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously referred to as 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 take advantage of a limited-scope audit. In this type, the auditor is not obligated 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 Seattle, WA businesses, if they satisfy the criteria.
The kind of audit your plan needs depends on your plan’s specific details, including the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan requires and help you be well-prepared for either process.
401(k) Audit Pain Points for Seattle, WA Employers
While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for Seattle, WA employers, particularly those running bigger 401(k) plans. These are some of the major issues 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 often struggle to arrange and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with changing DOL, IRS, and ERISA regulations is difficult. Compliance missteps can lead to audit failures, penalties, and expensive fixes in the long run.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees requires careful compliance checks and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation takes HR professionals, business owners, administrators, and others off of their core responsibilities, increasing stress and shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Missing the deadline could cause penalties and complicate things for the company.
At Correct Capital, we understand these challenges and offer customized assistance to make the audit process in Seattle, WA less stressful. Be it document collection or ensuring compliance 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 Seattle, WA employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can offer relief. These plans allow unrelated employers to participate in a unified 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Seattle, WA businesses to distribute the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): A more recent development, PEPs permit unrelated employers to participate in a collective 401(k) plan administered by a pooled plan provider (PPP). This structure simplifies compliance and cuts costs, making it a desirable option for Seattle, WA businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while ensuring regulatory compliance. Moving to one of these plans may be highly beneficial for smaller firms in Seattle, WA, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Seattle, WA 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support can greatly improve the process. Working with a team that understands both the technical and practical aspects of the audit process can save you significant time and stress. Here’s why partnering with the right experts matters:
- Experience and Expertise: A skilled team understands the complexities of 401(k) audits, including both 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 helps you remain up to date with evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. 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 handles more than 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 consume a lot of time from day-to-day operations. The ideal support will shoulder a lot of the admin work, giving your HR and finance teams the freedom to concentrate on other tasks. Correct Capital makes the process smoother, reducing the pressure on 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 obligated to adhere to all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Partnering with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Seattle, WA is as painless 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 Seattle, WA
Complying with 401(k) audits is both a regulatory obligation and an opportunity to ensure your Seattle, WA company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Seattle, WA businesses navigate the 401(k) audit lightens the load, enabling you to concentrate on your operations while preventing penalties for non-compliance.
Contact Correct Capital today to book a meeting and allow us to assist you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects 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 Seattle, WA advisor team, contact us online, or call us at 877-930-401(k) to get started.
