401(k) Audit Services in Sunnyvale, CA. For Sunnyvale, CA businesses that offer retirement plans, completing 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 doesn't favor higher-paid employees, 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 be a major source of stress and are a regulatory requirement. Our team will partner with you for everything from document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Sunnyvale, CA, or seeking to simplify a previously cumbersome 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.
Schedule a Meeting With an Advisor Today
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.
Schedule a 15-Minute Introductory Call
About 401(k) Audits
A 401(k) audit is an yearly review necessary for Sunnyvale, CA companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you still need an audit if there are 100 who are eligible. The audit confirms that the retirement plan adheres to the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s overall financial health, ensuring that contributions, distributions, and plan activities are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be complicated and lengthy. Correct Capital supports Sunnyvale, CA businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team by your side, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Sunnyvale, CA 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 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 known as “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, withdrawals, or other facets of plan oversight, enabling you to resolve these issues so they don't lead to fines.
- Filing Form 5500: The audit guarantees 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 confirms that employer and employee contributions remain within IRS limits for the year, helping to avoid excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to ensure they are reasonable and don’t pose an excessive cost for participants. Excessive fees may prompt compliance concerns and affect how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Sunnyvale, CA employers are serving the interests of plan participants, meeting their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are in compliance with regulatory guidelines is a critical part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Sunnyvale, CA employers could face, 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 mandated for most larger 401(k) plans. In a full-scope audit, the third-party auditor evaluates all components of the plan, including financial statements, compliance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates 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 qualify for a limited-scope audit. In this type, the auditor does not need to audit the investment information certified by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a better alternative for some Sunnyvale, CA businesses, provided they meet the criteria.
The specific audit required is based on your plan’s unique features, including the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan needs and ensure you're fully prepared for either process.
401(k) Audit Pain Points for Sunnyvale, CA Employers
While 401(k) audits are required to meet legal obligations, they often present significant challenges for Sunnyvale, CA employers, notably those overseeing more substantial retirement plans. Below are several common challenges that businesses face:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be a lengthy process. 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 evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can cause audit failures, penalties, and pricey amendments in the long run.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy involves detailed compliance reviews and can necessitate additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit pulls HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and distracting them from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 properly and punctually, which is essential to 401(k) compliance. Late submissions may lead to penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to make the audit process in Sunnyvale, CA smoother. Be it document collection or ensuring compliance 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 Sunnyvale, CA employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans allow unrelated 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, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup permits Sunnyvale, CA businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs permit unrelated employers to participate in a collective 401(k) plan managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it a desirable option for Sunnyvale, CA businesses seeking to simplify 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. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Sunnyvale, CA, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Sunnyvale, CA 401(k) Audit Team
401(k) audits can seem difficult, but selecting the proper assistance changes everything. Collaborating with experts that has a firm grasp of both technical and practical elements of the audit process reduces the time and pressure you face. 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 will assist you with the documentation process and highlight areas for enhancement 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 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, with more than $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 handle most of the administrative tasks, allowing your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the process, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an individual plan audit is no longer necessary, 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 experienced, reliable team is crucial for guaranteeing your 401(k) audit in Sunnyvale, CA goes as smoothly as possible. With Correct Capital by your side, you’ll be assured that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Sunnyvale, CA
Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to ensure your Sunnyvale, CA company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Sunnyvale, CA 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 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 Sunnyvale, CA advisor team, contact us online, or call us at 877-930-401(k) to get started.
