401(k) Audit Services in Springfield, MO. For Springfield, MO businesses that offer retirement plans, navigating a 401(k) audit can feel like an uphill battle. 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 disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches and cannot be avoided. Our team will assist 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 Springfield, MO, 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 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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About 401(k) Audits
A 401(k) audit is an annual review mandated for Springfield, MO companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively contributing to 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 assesses the plan’s overall financial health, ensuring that employee contributions, distributions, and operations are accurately represented.
While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital supports Springfield, MO businesses get ready for these audits by helping with document collection, helping clarify compliance testing, as well as other audit processes. With the right support, navigating the audit can become a much easier process.
Why are 401(k) Audits Necessary for Springfield, MO Companies?
You must undergo a 401(k) audit for multiple purposes, to ensure retirement plans remain compliant with 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 adheres to 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 checks if the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to guarantee the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other aspects of plan management, enabling you to resolve these issues before they result in fines.
- Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a required document that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS limits for the year, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to verify they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and hurt the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Springfield, MO employers are acting in the best interest of plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming 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 main categories of 401(k) audits that Springfield, MO 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 more comprehensive audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components 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 pertain to 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 verified by the financial institution, which can significantly reduce the audit’s complexity and cost. This could make it a better alternative for some Springfield, MO businesses, provided they meet the criteria.
The type of audit you need is determined by your plan’s particular characteristics, like the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan is subject to and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Springfield, MO Employers
While 401(k) audits are necessary for compliance, they can create major obstacles for Springfield, MO employers, particularly those managing larger plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to sort through and file the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations is difficult. Compliance oversights can lead to audit failures, penalties, and expensive fixes later on.
- Discrimination Testing: Ensuring 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: Getting ready for an audit takes HR professionals, business owners, administrators, and others out of their core responsibilities, increasing stress 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 can result in penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and offer customized assistance to make the audit process in Springfield, MO smoother. 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 Springfield, MO employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans allow unrelated employers to consolidate into one 401(k) plan, reducing the need for 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 enables Springfield, MO businesses to divide the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to participate in a collective 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 Springfield, MO businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, while still ensuring compliance with federal regulations. Moving to one of these plans may be particularly attractive for small companies in Springfield, MO, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Springfield, MO 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 highly experienced group will be familiar with the complexities of 401(k) audits, covering 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 will help you stay on top of evolving regulations, ensuring that your plan meets all necessary standards.
- 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 currently manages 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: Audit preparation can distract you significantly from day-to-day operations. The proper team will take on much of the administrative burden, giving your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, 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 required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Springfield, MO runs efficiently and stress-free. With Correct Capital as your partner, you’ll have the confidence that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Springfield, MO
Meeting 401(k) audit requirements is both a mandatory process and an important way to confirm your Springfield, MO company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Springfield, MO businesses through the 401(k) audit helps ease the burden, 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 assist with everything from document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Springfield, MO advisor team, contact us online, or call us at 877-930-401(k) to get started.
