401(k) Audit Services in Winston-Salem, NC. For Winston-Salem, NC businesses that offer retirement plans, navigating a 401(k) audit can feel like an uphill battle. Between regulation from the Department of Labor (DOL) and IRS, organizing necessary documents, and ensuring that your plan doesn't disproportionately benefit 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 cause considerable frustration and are mandatory. Our team will work with you for everything from document collection through meeting Form 5500 deadlines. Whether you're navigating your first audit in Winston-Salem, NC, or looking to streamline a previously cumbersome process, we're here to minimize the hassle. You can ask for a meeting with a member of our advisor team, contact us online, or call us at 877-930-401(k) to get started.
What is a 401(k) Audit?
A 401(k) audit is an annual review necessary for Winston-Salem, NC companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not 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 confirms that the retirement plan follows the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It reviews the plan’s financial integrity, ensuring that employee contributions, withdrawals, and plan activities are accurately represented.
While required for regulatory purposes, 401(k) audits can be complicated and time-consuming. Correct Capital assists Winston-Salem, NC businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, as well as other audit processes. With an experienced team by your side, navigating the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Winston-Salem, NC Companies?
You need to undergo a 401(k) audit for a variety of reasons, to ensure retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why you need them:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm 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 checks if the plan isn't overly advantageous to higher-paid employees (often referred to as “top-heavy” testing) in order to promote fairness across all participants.
- Identifying Operational Issues: Audits can uncover errors in contributions, distributions, or other facets of plan oversight, allowing you to correct these issues so they don't lead to penalties.
- Filing Form 5500: The audit guarantees proper and timely submission of Form 5500, a yearly filing that outlines the plan’s financial status, necessary for ensuring compliance with DOL and IRS regulations.
- Contribution Limits: The audit confirms that employer and employee contributions remain within IRS contribution limits, preventing excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may examine plan fees to confirm they are reasonable and not overly expensive for participants. Excessive fees may prompt compliance concerns and hurt how employees' investments and savings perform.
- Fiduciary Oversight: The audit confirms that Winston-Salem, NC employers are serving the interests of 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 consistent 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 Winston-Salem, NC employers might come across, depending on factors such as the size and nature 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 examines every part of the plan, which includes 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 ensure accuracy and compliance.
- Section 103(a)(3)(C)) Audit: Previously referred to as a "Limited Scope Audit," these apply to 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 is not required to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This can make it a more attractive option for some Winston-Salem, NC businesses, provided they meet the criteria.
The specific audit required depends 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 is subject to and make sure you're ready for either process.
401(k) Audit Pain Points for Winston-Salem, NC Employers
While 401(k) audits must be conducted to ensure compliance, they frequently pose difficulties for Winston-Salem, NC employers, notably those overseeing more substantial retirement plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Collecting the necessary paperwork, such as account statements, tax returns, and employee data, can be labor-intensive. Employers frequently have difficulties to organize and deliver the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Remaining compliant with evolving DOL, IRS, and ERISA regulations can be challenging. Compliance errors can result in audit failures, sanctions, and expensive fixes down the line.
- Discrimination Testing: Verifying that the plan isn’t top-heavy involves detailed compliance reviews and can lead to additional documentation and reporting.
- Time and Resource Demands: Preparing for an audit pulls HR professionals, business owners, administrators, and others out of their core responsibilities, heightening pressure and distracting them from regular business activities.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which plays a critical role in 401(k) compliance. Failing to meet the submission date could cause penalties and create further issues for the company.
At Correct Capital, we recognize these obstacles and provide tailored support to make the audit process in Winston-Salem, NC less stressful. 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 Winston-Salem, NC employers hoping to ease the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can ease the process. These plans allow unrelated employers to consolidate into one 401(k) plan, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans pool together several unrelated employers into one 401(k) plan, reducing the cost and complexity of managing and auditing individual plans. This setup permits Winston-Salem, NC businesses to share the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs allow unrelated employers to participate in a collective 401(k) plan administered by a pooled plan provider (PPP). This structure makes meeting regulations easier and cuts costs, making it attractive for Winston-Salem, NC 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 highly beneficial for smaller firms in Winston-Salem, NC, that want to provide a 401(k) but struggle with the costs and administrative burdens.
Working with the Right Winston-Salem, NC 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support 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 working with the right specialists is crucial:
- Experience and Expertise: A highly experienced group is knowledgeable about the details of 401(k) audits, covering 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 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, and represents over $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 take considerable time away from day-to-day operations. The proper team will handle most of the administrative tasks, allowing your HR and finance teams the freedom to concentrate on other tasks. Correct Capital simplifies the entire process, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses participating in an MEP or PEP, while an audit specific to your plan is no longer necessary, you're still responsible for following all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Partnering with a experienced, reliable team is essential to making sure your 401(k) audit in Winston-Salem, NC 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 Winston-Salem, NC
Meeting 401(k) audit requirements is both a legal requirement and an opportunity to ensure your Winston-Salem, NC company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s expertise in guiding Winston-Salem, NC businesses complete the 401(k) audit reduces the strain, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to schedule a consultation and let us help you prepare for a smooth, efficient audit. Our team of experts will assist with everything from document collection to compliance checks, ensuring your plan is fully optimized. You can schedule a meeting with a member of our Winston-Salem, NC advisor team, contact us online, or call us at 877-930-401(k) to get started.
