401(k) Audit Services in Sioux Falls, SD. For Sioux Falls, SD businesses that offer retirement plans, completing a 401(k) audit can feel like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, there is a lot to keep track of. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are mandatory. Our team will work with you with every aspect of document collection through making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Sioux Falls, SD, or seeking to simplify 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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About 401(k) Audits
A 401(k) audit is an yearly review required for Sioux Falls, SD companies with more than 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 are still required to have an audit if there are 100 who have the option to participate if they wanted. The audit confirms that the retirement plan complies with the regulations mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that contributions, distributions, and operations are accurately represented.
While required for regulatory purposes, 401(k) audits can be challenging and demanding. Correct Capital helps Sioux Falls, SD businesses navigate these audits by helping with document collection, helping clarify compliance testing, etc... With an experienced team in your corner, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Sioux Falls, SD Companies?
You must undergo a 401(k) audit for a variety of reasons, to ensure retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan complies with all legal requirements set 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 does not unfairly favor higher-paid employees (often called “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, withdrawals, or additional plan operations, enabling you to resolve these issues before they result in penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a required document summarizing the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies 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 confirm they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Sioux Falls, SD employers are serving the interests of plan participants, meeting their fiduciary responsibilities as mandated by ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are aligned 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 Sioux Falls, SD employers may encounter, 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 independent auditor reviews all aspects 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 verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Formerly known 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 required to audit the investment information endorsed by the financial institution, which can significantly reduce the audit’s complexity and cost. This may make it a preferable choice for some Sioux Falls, SD businesses, provided they meet the criteria.
The type of audit you need is determined by your plan’s specific details, including the nature of its investments. At Correct Capital, we will guide you to 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 Sioux Falls, SD Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for Sioux Falls, SD employers, notably those running bigger 401(k) plans. Here are some of the key pain points 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 frequently have difficulties to arrange and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can cause audit failures, sanctions, and pricey amendments later on.
- Discrimination Testing: Ensuring that the plan doesn't favor higher earning employees involves detailed compliance reviews 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 out of their core responsibilities, adding strain 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 is a key component of 401(k) compliance. Late submissions can result in penalties and create further issues for the company.
At Correct Capital, we understand these challenges and provide tailored support to make the audit process in Sioux Falls, SD smoother. Whether it’s helping with 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 Sioux Falls, SD employers seeking to reduce the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can ease the process. These plans allow unrelated employers to join a single 401(k) plan, frequently removing 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 Sioux Falls, SD businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs allow unrelated employers to join a shared 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it attractive for Sioux Falls, SD businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Switching to these types of plans may be highly beneficial for smaller firms in Sioux Falls, SD, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Sioux Falls, SD 401(k) Audit Team
401(k) audits can be daunting, but selecting the proper assistance can make all the difference. Collaborating with experts that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why partnering with the right experts matters:
- Experience and Expertise: A skilled team understands the details of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate 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, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will work closely 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, 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 proper team will handle most of the administrative tasks, giving your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an individual plan audit is no longer necessary, you're still obligated to adhere to all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a experienced, reliable team is key to ensuring your 401(k) audit in Sioux Falls, SD is as painless as possible. With Correct Capital as your partner, you’ll have the confidence that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Sioux Falls, SD
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to verify your Sioux Falls, SD company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Sioux Falls, SD businesses complete the 401(k) audit reduces the strain, allowing you to focus on your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and let us help you prepare for a smooth, efficient audit. Our team of experts will support you with everything, including document collection to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Sioux Falls, SD advisor team, contact us online, or call us at 877-930-401(k) to begin.