401(k) Audit Services in Tallahassee, FL. For Tallahassee, FL businesses offering their employees retirement plans, navigating a 401(k) audit can seem 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 does not need to disrupt your business and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can cause considerable frustration even though they are a regulatory requirement. Our team will assist you for everything from document collection to making sure Form 5500 is filed correctly and on time. Whether you're preparing for your first audit in Tallahassee, FL, or looking to streamline a previously inefficient process, we're here to ensure it’s as smooth and easy as possible. You can ask for 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 necessary for Tallahassee, FL companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively participating in the plan, you still need an audit if there are 100 who are eligible. The audit verifies that the retirement plan follows the regulations established 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 supports Tallahassee, FL businesses prepare for these audits by helping with document collection, assisting with understanding compliance testing, as well as other audit processes. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Tallahassee, FL Companies?
You must undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans stay in line with federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan follows all legal requirements set 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 isn't overly advantageous to higher-paid employees (often known as “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other facets of plan oversight, allowing you to correct these issues before they result in fines.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, a required document detailing the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions do not exceed 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. High fees can raise compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit verifies that Tallahassee, FL employers are serving the interests of plan participants, fulfilling 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 a vital part of the audit.
Types of 401(k) Audits
There are two primary types of 401(k) Audits that Tallahassee, FL employers might come across, depending on factors such as the size and nature 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 required for most larger 401(k) plans. In a full-scope audit, the independent auditor examines every part of the plan, such as financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously referred to 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 qualify for a limited-scope audit. In this type, the auditor is not obligated to audit the investment information verified by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a more attractive option for some Tallahassee, FL businesses, if they satisfy the criteria.
The type of audit you need depends on your plan’s unique features, like the nature of its investments. At Correct Capital, we are able to assist you figure out which type of audit your plan needs and ensure you're fully prepared for both audit types.
401(k) Audit Pain Points for Tallahassee, FL Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Tallahassee, FL employers, particularly those overseeing more substantial retirement plans. Below are several common challenges 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 may find it challenging to organize and submit the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with changing DOL, IRS, and ERISA regulations can prove difficult. Compliance errors can lead to audit failures, penalties, and pricey amendments later on.
- 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 takes HR professionals, business owners, administrators, and others away from their core responsibilities, adding strain and shifting focus 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. Missing the deadline can result in penalties and cause additional problems for the company.
At Correct Capital, we are aware of the difficulties involved and deliver personalized help to streamline the audit procedure in Tallahassee, FL. Be it 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 Tallahassee, FL employers hoping to ease the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can provide solutions. 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 permits Tallahassee, FL businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable 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 a desirable option for Tallahassee, FL 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. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Tallahassee, FL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Tallahassee, FL 401(k) Audit Team
401(k) audits can appear challenging, but choosing the right support changes everything. Partnering with professionals that understands both the technical and practical aspects of the audit process helps you avoid unnecessary delays and anxiety. Here’s why working with the right specialists is crucial:
- Experience and Expertise: A skilled team will be familiar with the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We help you navigate the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team helps you remain up to date with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: All 401(k) plans are distinct. An experienced team will collaborate with you to understand 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, 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: Preparing for a 401(k) audit can distract you significantly 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 simplifies the entire process, taking the stress off your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is not required, 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 experienced, reliable team is key to ensuring your 401(k) audit in Tallahassee, FL goes as smoothly as possible. With Correct Capital supporting you, 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 Tallahassee, FL
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to verify your Tallahassee, FL company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Tallahassee, FL businesses complete the 401(k) audit reduces the strain, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and let us help you get ready for a streamlined, effective audit. Our team of experts will help with all aspects from document collection to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Tallahassee, FL advisor team, contact us online, or call us at 877-930-401(k) to begin.
