401(k) Audit Services in Cincinnati, OH. For Cincinnati, OH 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 are many factors to consider. 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 cause considerable frustration and are a regulatory requirement. 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 Cincinnati, OH, or seeking to simplify a process that's usually a burden, we're here to minimize the hassle. You can schedule 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 necessary for Cincinnati, OH 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 contributing to the plan, you must still undergo an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan adheres to 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 contributions, distributions, and plan activities are accurately represented.
While required for regulatory purposes, 401(k) audits can be challenging and lengthy. Correct Capital supports Cincinnati, OH businesses get ready for these audits by helping with document collection, helping clarify compliance testing, and other related tasks. With the right support, handling the audit process can become a far more manageable task.
Why are 401(k) Audits Necessary for Cincinnati, OH Companies?
You need to undergo a 401(k) audit for multiple purposes, to ensure 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 complies with all legal requirements mandated by the Department of Labor (DOL) and the IRS, with emphasis under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan disproportionately benefits higher-paid employees (often referred to as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or other aspects of plan management, providing an opportunity to fix these issues to avoid penalties.
- Filing Form 5500: The audit confirms proper and timely submission 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 confirms that employer and employee contributions stay within IRS limits for the year, helping to avoid excess contributions that could lead to penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify 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 confirms that Cincinnati, OH employers are acting in the best interest of plan participants, fulfilling their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Confirming that the plan's documents, policies, and operational practices are consistent 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 Cincinnati, OH employers might come across, 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 most detailed audit necessary for most larger 401(k) plans. In a full-scope audit, the independent auditor examines every part of the plan, including financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor evaluates supporting documentation for contributions, distributions, 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 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 does not need to audit the investment information certified by the financial institution, which can substantially lower the audit’s complexity and cost. This can make it a preferable choice for some Cincinnati, OH businesses, as long as they meet the criteria.
The specific audit required is based on your plan’s specific details, including the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan is subject to and ensure you're fully prepared for whichever process is necessary.
401(k) Audit Pain Points for Cincinnati, OH Employers
While 401(k) audits are necessary for compliance, they often present significant challenges for Cincinnati, OH employers, especially those offering bigger 401(k) plans. Below are several common challenges that employers encounter:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers often struggle to arrange and deliver 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 be challenging. Compliance errors can lead to audit failures, fines, and expensive fixes in the long run.
- Discrimination Testing: Making sure that the plan doesn't favor higher earning employees demands thorough checks for compliance and can result in 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 shifting focus from everyday business tasks.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 properly and punctually, which is essential to 401(k) compliance. Missing the deadline can result in penalties and complicate things for the company.
At Correct Capital, we understand these challenges and deliver personalized help to streamline the audit procedure in Cincinnati, OH. 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 Cincinnati, OH employers seeking to reduce the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans permit various businesses to consolidate into one 401(k) plan, frequently removing employer-specific audits.
- Multiple Employer Plans (MEP): These plans combine several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup allows Cincinnati, OH businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs allow unrelated employers to join a shared 401(k) plan overseen by a pooled plan provider (PPP). This structure makes meeting regulations easier and cuts costs, making it appealing for Cincinnati, OH businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can dramatically cut down the expenses and time involved in audits, all while maintaining adherence to regulations. Transitioning into an MEP or PEP may be particularly attractive for small companies in Cincinnati, OH, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Cincinnati, OH 401(k) Audit Team
401(k) audits can seem difficult, but choosing the right support can greatly improve the process. Collaborating with experts that is well-versed in both the technicalities and practicalities of the audit process helps you avoid unnecessary delays and anxiety. Here’s why having the right experts on your side is important:
- Experience and Expertise: A highly experienced group will be familiar with the complexities of 401(k) audits, covering both full-scope and limited-scope audits. We will assist you with the documentation process and help identify areas of improvement within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, ensuring that your plan meets all necessary standards.
- Tailored Support: Each 401(k) plan has unique requirements. An experienced team will collaborate with you to identify 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, 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: Preparing for a 401(k) audit can consume a lot of time from day-to-day operations. The ideal support will handle most of the administrative tasks, enabling 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 individual plan audit is not required, 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 knowledgeable, reliable team is essential to making sure your 401(k) audit in Cincinnati, OH is as painless as possible. With Correct Capital by your side, you’ll feel secure that your audit will be handled with precision and care.
Call Correct Capital for Help With Your 401(k) Audit in Cincinnati, OH
Complying with 401(k) audits is both a legal requirement and an opportunity to ensure your Cincinnati, OH company's retirement plan stays advantageous to your employees. Correct Capital’s expertise in guiding Cincinnati, OH businesses complete the 401(k) audit helps ease the burden, letting you prioritize your business while ensuring you're not penalized for non-compliance.
Contact Correct Capital today to book a meeting and let us help you ensure your audit goes smoothly and efficiently. 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 Cincinnati, OH advisor team, contact us online, or call us at 877-930-401(k) to begin.
