401(k) Audit St. Paul, MN

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401(k) Audit Services in St. Paul, MN. For St. Paul, MN businesses that offer retirement plans, completing a 401(k) audit can seem like a challenging process. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, 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 affect your daily business activities.

At Correct Capital, we understand that 401(k) audits can be a major source of stress even though they cannot be avoided. Our team will assist you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in St. Paul, MN, or looking to streamline 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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What is a 401(k) Audit?

A 401(k) audit is an yearly review mandated for St. Paul, MN 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 are still required to have an audit if there are 100 who are eligible. The audit verifies that the retirement plan complies with 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 contributions, distributions, and operations are accurately represented.

While necessary to meet legal requirements, 401(k) audits can be challenging and time-consuming. Correct Capital supports St. Paul, MN businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, and other related tasks. With an experienced team in your corner, handling the audit process can become a much easier process.

Why are 401(k) Audits Necessary for St. Paul, MN Companies?

You are required to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans adhere to 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 established 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 isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
  • Identifying Operational Issues: Audits can uncover errors in contributions, withdrawals, or other aspects of plan management, enabling you to resolve these issues before they result in penalties.
  • Filing Form 5500: The audit guarantees the accurate and on-time filing of Form 5500, a yearly filing summarizing 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 could lead to penalties.
  • Fee Reasonableness: Auditors may evaluate plan fees to verify 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 ensures that St. Paul, MN employers are serving the interests 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 in compliance with regulatory guidelines is one of the most important parts of the audit.

Types of 401(k) Audits

There are two main categories of 401(k) audits that St. Paul, MN employers may encounter, depending on the size and complexity of their plan. These types of audits are determined by the structure of the retirement plan, as well as its investment and participant details.

  • Full-Scope Audit: This is the thorough audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, such as 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: 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 obligated to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This may make it a preferable choice for some St. Paul, MN businesses, provided they meet the criteria.

The kind of audit your plan needs is determined by your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we will guide you to determine which type of audit your plan requires and make sure you're ready for either process.

401(k) Audit Pain Points for St. Paul, MN Employers

While 401(k) audits are required to meet legal obligations, they frequently pose difficulties for St. Paul, MN employers, especially those managing larger plans. Below are several common challenges 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 may find it challenging to organize 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 can prove difficult. Compliance errors can lead to audit failures, penalties, and expensive fixes later on.
  • 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 draws HR professionals, business owners, administrators, and others off of their core responsibilities, adding strain and diverting attention from regular business activities.
  • Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is a key component of 401(k) compliance. Missing the deadline may lead to penalties and cause additional problems for the company.

At Correct Capital, we understand these challenges and deliver personalized help to streamline the audit procedure in St. Paul, MN. Be it document collection or confirming conformity with regulations, our team helps take the burden off your shoulders.

401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)

For St. Paul, MN employers looking to lower the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can offer relief. These plans allow unrelated employers to join a single 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 allows St. Paul, MN businesses to divide the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
  • Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to enter a unified 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it appealing for St. Paul, MN businesses looking to streamline their retirement offerings.

Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Switching to these types of plans may be especially appealing to smaller businesses in St. Paul, MN, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.

Working with the Right St. Paul, MN 401(k) Audit Team

401(k) audits can seem difficult, but having the right team in place changes everything. Working with a team that is well-versed in both the technicalities and practicalities of the audit process can save you significant time and stress. Here’s why working with the right specialists is crucial:

  • Experience and Expertise: A skilled team is knowledgeable about the details 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 will help you stay on top of 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 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: Audit preparation 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 to focus on other priorities. Correct Capital simplifies the entire process, 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, though with a reduced administrative workload after plan year end.

*as of March 2024

Working with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in St. Paul, MN goes as smoothly as possible. With Correct Capital as your partner, you’ll feel secure that your audit will be handled with precision and care.

Call Correct Capital for Help With Your 401(k) Audit in St. Paul, MN

Complying with 401(k) audits is both a mandatory process and an opportunity to verify your St. Paul, MN company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s expertise in guiding St. Paul, MN businesses navigate the 401(k) audit reduces the strain, allowing you to focus on your business while ensuring you're not penalized for non-compliance.

Contact Correct Capital today to book a meeting and allow us to assist 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 St. Paul, MN advisor team, contact us online, or call us at 877-930-401(k) to get started.


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