401(k) Audit Services in Tucson, AZ. For Tucson, AZ businesses offering their employees retirement plans, completing a 401(k) audit can feel 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 doesn't favor higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are a regulatory requirement. Our team will assist you for everything from document collection through meeting Form 5500 deadlines. Whether you're navigating your first audit in Tucson, AZ, or seeking to simplify a process that's usually a burden, we're here to make it as simple and stress-free as possible. You can ask for 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.
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
More From Correct Capital Wealth Management
Explore how Correct Capital Wealth Management can help guide you toward smarter decisions, clearer goals, and lasting financial success.
Subscribe To Our Newsletter Listen To Our Podcast Watch Our YouTube Channel
About 401(k) Audits
A 401(k) audit is an yearly review mandated for Tucson, AZ companies who have at least 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 are still required to have an audit if there are 100 who have the option to participate if they wanted. 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 evaluates the plan’s overall financial health, ensuring that contributions, withdrawals, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complicated and lengthy. Correct Capital helps Tucson, AZ businesses navigate these audits by aiding in document collection, helping clarify compliance testing, as well as other audit processes. With the right support, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Tucson, AZ Companies?
You must undergo a 401(k) audit for multiple purposes, ensuring that retirement plans adhere to federal regulations and protect both the employer and employees. Here’s why they are required:
- 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, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit ensures that the plan does not unfairly favor higher-paid employees (often called “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in employee contributions, distributions, or other aspects of plan management, enabling you to resolve these issues to avoid penalties.
- Filing Form 5500: The audit confirms the accurate and on-time filing of Form 5500, a required document 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 remain within IRS contribution limits, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may examine plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. High fees can raise compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit ensures that Tucson, AZ employers are serving the interests of plan participants, meeting their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are aligned 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 Tucson, AZ 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 required for most larger 401(k) plans. In a full-scope audit, the third-party 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 verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Previously called 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 significantly reduce the audit’s complexity and cost. This could make it a preferable choice for some Tucson, AZ businesses, provided they meet the criteria.
The specific audit required depends on your plan’s specific details, such as the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan requires and make sure you're ready for both audit types.
401(k) Audit Pain Points for Tucson, AZ Employers
While 401(k) audits are necessary for compliance, they frequently pose difficulties for Tucson, AZ employers, particularly those running bigger 401(k) plans. These are some of the major issues that companies deal with:
- Document Collection and Management: Gathering the right documents, such as account statements, tax returns, and employee data, can be labor-intensive. Employers frequently have difficulties to sort through and submit the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with changing DOL, IRS, and ERISA regulations can be challenging. Compliance missteps can result in audit failures, sanctions, and costly corrections later on.
- Discrimination Testing: Verifying that the plan doesn't favor higher earning employees involves detailed compliance reviews and can result in additional documentation and reporting.
- Time and Resource Demands: Audit preparation takes HR professionals, business owners, administrators, and others off of their core responsibilities, adding strain and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses face challenges when they file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Late submissions can result in penalties and create further issues for the company.
At Correct Capital, we are aware of the difficulties involved and offer customized assistance to streamline the audit procedure in Tucson, AZ. From assisting with 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 Tucson, AZ employers hoping to ease the complexity 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, 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 enables Tucson, AZ businesses to divide the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs permit unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and lowers expenses, making it appealing for Tucson, AZ businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be especially appealing to smaller businesses in Tucson, AZ, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Tucson, AZ 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place changes everything. Collaborating with experts that has a firm grasp of both technical and practical elements of the audit process can save you significant time and stress. Here’s why partnering with the right experts matters:
- Experience and Expertise: A skilled team understands the complexities of 401(k) audits, including both full-scope and limited-scope audits. We can guide you through the documentation process and help identify areas of improvement 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: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to grasp the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital is responsible for managing 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: Getting ready for a 401(k) audit can take considerable time away from day-to-day operations. The ideal support will handle most of the administrative tasks, 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 in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an audit specific to your plan is no longer necessary, you're still required to comply with all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Collaborating with a well-informed, reliable team is essential to making sure your 401(k) audit in Tucson, AZ is as painless 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 Tucson, AZ
Meeting 401(k) audit requirements is both a mandatory process and an opportunity to verify your Tucson, AZ company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s expertise in guiding Tucson, AZ businesses through the 401(k) audit reduces the strain, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you ensure your audit goes smoothly and efficiently. Our team of experts will help with all aspects from document collection to compliance checks, making sure your plan is set up for success. You can schedule a meeting with a member of our Tucson, AZ advisor team, contact us online, or call us at 877-930-401(k) to start the process.
