401(k) Audit Services in Toledo, OH. For Toledo, OH businesses offering their employees retirement plans, completing a 401(k) audit can seem like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, collecting extensive documentation, 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 affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are mandatory. Our team will work with you for everything from document collection through meeting Form 5500 deadlines. Whether you're preparing for your first audit in Toledo, OH, or looking to streamline a process that's usually a burden, we're here to make it as simple and stress-free as possible. You can book a meeting with a member of our advisor team, fill out our online form, 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 mandated for Toledo, OH companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled in the plan, you must still undergo an audit if there are 100 who have the option to participate if they wanted. The audit confirms that the retirement plan follows the regulations set by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It assesses the plan’s financial integrity, ensuring that employee contributions, distributions, and plan activities are accurately represented.
While necessary to meet legal requirements, 401(k) audits can be challenging and lengthy. Correct Capital assists Toledo, OH businesses get ready for these audits by aiding in document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team in your corner, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Toledo, OH Companies?
You must undergo a 401(k) audit for multiple purposes, to ensure retirement plans remain compliant with federal regulations and protect 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 set by the Department of Labor (DOL) and the IRS, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan disproportionately benefits higher-paid employees (often called “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues so they don't lead to penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, an annual report 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 stay within IRS limits for the year, preventing excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and not overly expensive for participants. High fees can raise compliance concerns and affect the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Toledo, OH employers are serving the interests of plan participants, fulfilling their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are consistent with regulatory guidelines is a key part of the audit.
Types of 401(k) Audits
There are two kinds of 401(k) audits that Toledo, OH employers might come across, based on the specific details 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 more comprehensive audit required for most larger 401(k) plans. In a full-scope audit, the independent auditor reviews all aspects of the plan, which includes financial statements, adherence to 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 take advantage of a limited-scope audit. In this type, the auditor does not need to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This could make it a better alternative for some Toledo, OH businesses, if they satisfy the criteria.
The kind of audit your plan needs depends on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan needs and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Toledo, OH Employers
While 401(k) audits are necessary for compliance, they frequently pose difficulties for Toledo, OH employers, notably those managing larger plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Gathering the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers may find it challenging to arrange and submit the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with shifting DOL, IRS, and ERISA regulations is difficult. Compliance oversights can lead to audit failures, fines, and pricey amendments down the line.
- Discrimination Testing: Making sure that the plan isn’t top-heavy requires careful compliance checks 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, increasing stress and shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is a key component of 401(k) compliance. Missing the deadline could cause penalties and create further issues for the company.
At Correct Capital, we are aware of the difficulties involved and provide tailored support to make the audit process in Toledo, OH more efficient. Be it document collection or verifying adherence to regulations, our team helps take the burden off your shoulders.
401(k) Audits for Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
For Toledo, OH employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can ease the process. These plans permit various businesses to participate in a unified 401(k) plan, often eliminating 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 Toledo, OH businesses to divide the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs allow unrelated employers to participate in a collective 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it attractive for Toledo, OH businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while still ensuring compliance with federal regulations. Moving to one of these plans may be particularly attractive for small companies in Toledo, OH, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Toledo, OH 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place changes everything. Collaborating with experts that understands both the technical and practical aspects of the audit process helps you avoid unnecessary delays and anxiety. Here’s why partnering with the right experts matters:
- Experience and Expertise: A highly experienced group will be familiar with the details of 401(k) audits, encompassing full-scope and limited-scope audits. We can guide you through the documentation process and highlight areas for enhancement within your plan.
- Compliance Assurance: The right team ensures you keep up with evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to understand the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, with more than $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 right partner will take on much of the administrative burden, giving your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the 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 required to comply with all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a knowledgeable, reliable team is key to ensuring your 401(k) audit in Toledo, OH runs efficiently and stress-free. With Correct Capital by your side, you’ll be assured that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Toledo, OH
Adhering to 401(k) audit regulations is both a mandatory process and an opportunity to ensure your Toledo, OH company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Toledo, OH businesses complete the 401(k) audit lightens the load, letting you prioritize your business while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you ensure your audit goes smoothly and efficiently. Our team of experts will assist with everything from document collection through to compliance checks, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Toledo, OH advisor team, contact us online, or call us at 877-930-401(k) to begin.
