401(k) Audit Services in Virginia Beach, VA. For Virginia Beach, VA businesses that offer retirement plans, navigating a 401(k) audit can feel like a daunting task. Between compliance requirements from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan isn’t “top-heavy”, it can be overwhelming. 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 cause considerable frustration even though they cannot be avoided. Our team will work with you for everything from document collection through making sure Form 5500 is filed correctly and on time. Whether you're getting ready for your initial audit in Virginia Beach, VA, or seeking to simplify a previously inefficient process, we're here to minimize the hassle. You can book 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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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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What is a 401(k) Audit?
A 401(k) audit is an yearly review necessary for Virginia Beach, VA companies who have more than 100 eligible participants in their 401(k) plan. Note: Even if you don’t have more than 100 employees actively enrolled in the plan, you are still required to have an audit if there are 100 who are eligible. The audit ensures that the retirement plan complies with 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 employee contributions, distributions, and operations are accurately represented.
While required for regulatory purposes, 401(k) audits can be complicated and demanding. Correct Capital supports Virginia Beach, VA businesses navigate these audits by helping with document collection, assisting with understanding compliance testing, as well as other audit processes. With an experienced team in your corner, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Virginia Beach, VA Companies?
You need to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans stay in line with federal regulations and protect both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: Audits ensure 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 checks if the plan does not unfairly favor higher-paid employees (often known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other facets of plan oversight, 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, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit ensures that employer and employee contributions stay within IRS contribution limits, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may review plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and negatively impact how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Virginia Beach, VA employers are working to benefit plan participants, satisfying their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring 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 primary types of 401(k) Audits that Virginia Beach, VA employers could face, depending on the size and complexity 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 thorough audit necessary for most larger 401(k) plans. In a full-scope audit, the external 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 evaluates supporting documentation for contributions, withdrawls, 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 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 endorsed by the financial institution, which can substantially lower the audit’s complexity and cost. This could make it a better alternative for some Virginia Beach, VA businesses, provided they meet the criteria.
The type of audit you need is based on your plan’s particular characteristics, 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 make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Virginia Beach, VA Employers
While 401(k) audits must be conducted to ensure compliance, they often present significant challenges for Virginia Beach, VA employers, particularly those overseeing more substantial retirement plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be labor-intensive. Employers often struggle 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 prove difficult. Compliance errors can result in audit failures, sanctions, and expensive fixes later on.
- 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: Audit preparation takes HR professionals, business owners, administrators, and others off of their core responsibilities, increasing stress and distracting them from day-to-day operations.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 accurately and on time, which is essential to 401(k) compliance. Failing to meet the submission date can result in penalties and create further issues for the company.
At Correct Capital, we understand these challenges and deliver personalized help to make the audit process in Virginia Beach, VA more efficient. Whether it’s helping with 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 Virginia Beach, VA employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans permit various businesses 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, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup permits Virginia Beach, VA businesses to distribute the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs allow unrelated employers to join a shared 401(k) plan administered by a pooled plan provider (PPP). This structure streamlines the regulatory process and lowers expenses, making it attractive for Virginia Beach, VA businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while ensuring regulatory compliance. Transitioning into an MEP or PEP may be particularly attractive for small companies in Virginia Beach, VA, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Virginia Beach, VA 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Collaborating with experts 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 team of experts will be familiar with the nuances of 401(k) audits, including 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 ensures you keep up 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 grasp the unique needs of your plan and assist you in getting ready for your specific audit requirements. Correct Capital handles more than 37 plans in both small and large companies, representing 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: Preparing for a 401(k) audit can distract you significantly from day-to-day operations. The proper team will shoulder a lot of the admin work, enabling your HR and finance teams the ability to address other important matters. Correct Capital helps streamline the process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an audit specific to your plan is no longer mandated, you're still obligated to adhere to all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Collaborating with a knowledgeable, reliable team is essential to making sure your 401(k) audit in Virginia Beach, VA is as painless as possible. With Correct Capital by your side, you’ll have the confidence that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Virginia Beach, VA
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to verify your Virginia Beach, VA company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Virginia Beach, VA businesses through the 401(k) audit helps ease the burden, enabling you to concentrate on your operations while avoiding fines for non-compliance.
Contact Correct Capital today to book a meeting and we'll guide you get ready for a streamlined, effective audit. Our team of experts will assist with everything from document collection through to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Virginia Beach, VA advisor team, contact us online, or call us at 877-930-401(k) to get started.