401(k) Audit Services in Raleigh, NC. For Raleigh, NC businesses that offer retirement plans, completing a 401(k) audit can seem like an uphill battle. Between compliance requirements from the Department of Labor (DOL) and IRS, collecting extensive documentation, and ensuring that your plan doesn't favor higher-paid employees, it can be overwhelming. However, with the right support, the 401(k) audit does not need to disrupt your business and interfere with your company’s daily 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 work with you with every aspect of document collection to making sure Form 5500 is filed correctly and on time. Whether you're navigating your first audit in Raleigh, NC, or hoping to optimize a previously cumbersome process, we're here to ensure it’s as smooth and easy 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.
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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 annual review mandated for Raleigh, NC companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively enrolled 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 mandated by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s financial integrity, ensuring that employee contributions, distributions, and operations are accurately represented.
While necessary for compliance, 401(k) audits can be complex and time-consuming. Correct Capital assists Raleigh, NC businesses navigate these audits by helping with document collection, assisting with understanding compliance testing, and other related tasks. With an experienced team in your corner, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Raleigh, NC Companies?
You are required to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans remain compliant with federal regulations and safeguard both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: A 401(k) audit guarantees that your 401(k) plan follows all legal requirements established by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit checks if the plan isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) in order to promote the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover 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 confirms 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 do not exceed IRS limits for the year, preventing excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and aren’t unnecessarily high for participants. Excessive fees may prompt compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit ensures that Raleigh, NC employers are acting in the best interest 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 main categories of 401(k) audits that Raleigh, NC employers could face, depending on factors such as the size and nature 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 mandated for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, including financial statements, compliance 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 pertain to plans with investments managed 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 is not obligated to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This may make it a preferable choice for some Raleigh, NC businesses, provided they meet the criteria.
The type of audit you need is determined by your plan’s unique features, such as the nature of its investments. At Correct Capital, we will guide you to figure out which type of audit your plan is subject to and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for Raleigh, NC Employers
While 401(k) audits are necessary for compliance, they frequently pose difficulties for Raleigh, NC employers, particularly those running bigger 401(k) plans. These are some of the major issues that businesses face:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers frequently have difficulties to organize and file the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations can prove difficult. Compliance missteps can cause audit failures, penalties, and expensive fixes in the long run.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy involves detailed compliance reviews and can lead to additional documentation and reporting.
- Time and Resource Demands: Getting ready for an audit pulls HR professionals, business owners, administrators, and others off of their core responsibilities, adding strain and diverting attention from regular business activities.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 accurately and on time, which is a key component of 401(k) compliance. Missing the deadline may lead to penalties and cause additional problems for the company.
At Correct Capital, we recognize these obstacles and offer customized assistance to make the audit process in Raleigh, NC less stressful. Whether it’s helping with document collection or confirming conformity with 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 Raleigh, NC employers hoping to ease the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP) can provide solutions. These plans enable different employers to participate in a unified 401(k) plan, often eliminating employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup allows Raleigh, NC businesses to distribute the administrative responsibilities and potentially avoid the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to enter a unified 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and reduces costs, making it attractive for Raleigh, NC businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, while still ensuring compliance with federal regulations. Moving to one of these plans may be particularly attractive for small companies in Raleigh, NC, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Raleigh, NC 401(k) Audit Team
401(k) audits can appear challenging, but selecting the proper assistance changes everything. Working with a team 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 team of experts will be familiar with the details of 401(k) audits, including both 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 helps you remain up to date with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will work closely 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, representing 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: Getting ready 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 the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, easing the load for your internal team.
- MEPs and PEPs Expertise: For businesses in a Multiple Employer Plan (MEP) or Pooled Employer Plan (PEP), while an separate audit is no longer mandated, you're still responsible for following all the rules and regulations, just with less administrative burdens after plan year end.
*as of March 2024
Partnering with a experienced, reliable team is essential to making sure your 401(k) audit in Raleigh, NC runs efficiently and stress-free. With Correct Capital supporting you, you’ll have the confidence that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Raleigh, NC
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to ensure your Raleigh, NC company's retirement plan remains as beneficial as possible to your employees. Correct Capital’s experience in assisting Raleigh, NC businesses navigate the 401(k) audit lightens the load, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session and allow us to assist you prepare for a smooth, efficient audit. 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 Raleigh, NC advisor team, contact us online, or call us at 877-930-401(k) to get started.
