401(k) Audit Services in St. Louis, MO. For St. Louis, MO businesses that offer retirement plans, navigating a 401(k) audit can seem like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, 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 can be made much easier and disrupt your day-to-day operations.
At Correct Capital, we understand that 401(k) audits can be a major source of stress and 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 navigating your first audit in St. Louis, MO, 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, 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 yearly review required for St. Louis, MO companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively contributing to the plan, you still need an audit if there are 100 who are eligible. The audit verifies that the retirement plan follows the regulations set by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that employee contributions, withdrawals, and plan activities are properly documented.
While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital helps St. Louis, MO businesses prepare for these audits by aiding in document collection, ensuring comprehension of compliance testing, and other related tasks. With an experienced team by your side, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for St. Louis, MO Companies?
You must undergo a 401(k) audit for several reasons, to ensure 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: The purpose of audits is to confirm that your 401(k) plan adheres to 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 ensures that the plan does not unfairly favor higher-paid employees (often known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in contributions, distributions, or other facets of plan oversight, allowing you to correct these issues so they don't lead to penalties.
- Filing Form 5500: The audit guarantees proper and timely submission of Form 5500, an annual report that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions stay within IRS limits for the year, helping to avoid excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that St. Louis, MO employers are working to benefit 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 consistent with regulatory guidelines is one of the most important parts of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that St. Louis, MO employers may encounter, 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 required for most larger 401(k) plans. In a full-scope audit, the independent auditor evaluates all components of the plan, which includes financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, withdrawls, and other transactions to ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Previously called 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 qualify for 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 may make it a more attractive option for some St. Louis, MO businesses, as long as they meet the criteria.
The type of audit you need is based on your plan’s unique features, like the nature of its investments. At Correct Capital, we will guide you to understand which type of audit your plan needs and make sure you're ready for either process.
401(k) Audit Pain Points for St. Louis, MO Employers
While 401(k) audits must be conducted to ensure compliance, they can create major obstacles for St. Louis, MO employers, especially those managing larger plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling the right documents, such as account statements, tax returns, and employee data, can be a lengthy process. Employers may find it challenging to arrange and deliver the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance errors can result in audit failures, sanctions, and pricey amendments in the long run.
- Discrimination Testing: Verifying that the plan isn’t top-heavy involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others off of their core responsibilities, heightening pressure and distracting them from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 accurately and on time, which is essential to 401(k) compliance. Missing the deadline could cause penalties and create further issues for the company.
At Correct Capital, we recognize these obstacles and deliver personalized help to make the audit process in St. Louis, MO less stressful. From assisting with 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 St. Louis, MO 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, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup enables St. Louis, MO businesses to divide 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 join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it attractive for St. Louis, MO businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Moving to one of these plans may be especially appealing to smaller businesses in St. Louis, MO, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right St. Louis, MO 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support can greatly improve the process. Partnering with professionals that is well-versed in both the technicalities and practicalities of the audit process reduces the time and pressure you face. Here’s why partnering with the right experts matters:
- Experience and Expertise: A highly experienced group is knowledgeable about the nuances of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will work closely with you to grasp the unique needs of your plan and assist you in getting ready 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, enabling us to understand the specifics of any company 401(k) plan.
- Saving Time and Resources: Audit preparation can consume a lot of time from day-to-day operations. The ideal support 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 no longer necessary, you're still responsible for following all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a well-informed, reliable team is essential to making sure your 401(k) audit in St. Louis, MO goes as smoothly 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 St. Louis, MO
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to verify your St. Louis, MO company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping St. Louis, MO businesses navigate the 401(k) audit reduces the strain, enabling you to concentrate on your operations while preventing penalties for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you get ready for a streamlined, effective audit. Our team of experts will support you with everything, including document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our St. Louis, MO advisor team, contact us online, or call us at 877-930-401(k) to start the process.
