401(k) Audit Services in Gilbert, AZ. For Gilbert, AZ businesses offering their employees retirement plans, navigating a 401(k) audit can feel like a challenging process. Between regulation from the Department of Labor (DOL) and IRS, collecting extensive documentation, 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 doesn’t have to feel like a burden and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches and are mandatory. Our team will work with you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're getting ready for your initial audit in Gilbert, AZ, or hoping to optimize a process that's usually a burden, 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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About 401(k) Audits
A 401(k) audit is an annual review necessary for Gilbert, AZ companies with at least 100 eligible participants in their 401(k) plan. Note: Even if you lack more than 100 employees actively participating 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 adheres to the regulations established 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 plan activities are properly documented.
While required for regulatory purposes, 401(k) audits can be complicated and lengthy. Correct Capital helps Gilbert, AZ businesses prepare for these audits by assisting with document collection, ensuring comprehension of compliance testing, and other related tasks. With an experienced team by your side, getting through the audit can become a much easier process.
Why are 401(k) Audits Necessary for Gilbert, AZ Companies?
You must undergo a 401(k) audit for a variety of reasons, to ensure 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: The purpose of audits is to confirm 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 ensures that the plan isn't overly advantageous to higher-paid employees (often called “top-heavy” testing) to ensure fairness across all participants.
- Identifying Operational Issues: Audits may reveal errors in employee contributions, distributions, or other facets of plan oversight, providing an opportunity to fix these issues to avoid penalties.
- Filing Form 5500: The audit ensures proper and timely submission of Form 5500, a yearly filing that outlines the plan’s financial status, which is required to maintain compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions remain within IRS limits for the year, reducing the risk of excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may review plan fees to ensure they are reasonable and not overly expensive 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 Gilbert, AZ employers are serving the interests of plan participants, meeting their fiduciary responsibilities as mandated by 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 primary types of 401(k) Audits that Gilbert, AZ 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 necessary for most larger 401(k) plans. In a full-scope audit, the third-party auditor examines every part of the plan, such as financial statements, conformance with Department of Labor (DOL) and IRS regulations, and participant data. The auditor reviews supporting documentation for contributions, distributions, and other transactions to confirm correctness and adherence to regulations.
- Section 103(a)(3)(C)) Audit: Previously called a "Limited Scope Audit," these apply to plans with investments held by a qualified, regulated financial institution (such as a bank or insurance company). The employer may be eligible for a limited-scope audit. In this type, the auditor is not obligated 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 Gilbert, AZ businesses, if they satisfy the criteria.
The kind of audit your plan needs is determined by your plan’s unique features, such as the nature of its investments. At Correct Capital, we can help you understand which type of audit your plan requires and help you be well-prepared for whichever process is necessary.
401(k) Audit Pain Points for Gilbert, AZ Employers
While 401(k) audits are necessary for compliance, they frequently pose difficulties for Gilbert, AZ employers, particularly those overseeing more substantial retirement plans. Here are some of the key pain points that employers encounter:
- Document Collection and Management: Assembling the required files, such as account statements, tax returns, and employee data, can be time-consuming. Employers may find it challenging to arrange and file the necessary paperwork, notably in the case of larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with evolving DOL, IRS, and ERISA regulations can prove difficult. Compliance oversights can lead to audit failures, fines, and costly corrections later on.
- Discrimination Testing: Making sure that the plan isn’t top-heavy demands thorough checks for compliance 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 shifting focus from regular business activities.
- Form 5500 and Timely Submissions: Many businesses have difficulty with file Form 5500 properly and punctually, which is essential to 401(k) compliance. Failing to meet the submission date may lead to penalties and complicate things for the company.
At Correct Capital, we recognize these obstacles and deliver personalized help to make the audit process in Gilbert, AZ more efficient. 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 Gilbert, AZ employers looking to lower the workload of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can ease the process. These plans allow unrelated employers to participate in a unified 401(k) plan, reducing the need for employer-specific audits.
- Multiple Employer Plans (MEP): These plans consolidate several unrelated employers into one 401(k) plan, lowering the expenses and simplifying the management of managing and auditing individual plans. This setup permits Gilbert, AZ businesses to distribute the administrative responsibilities and often sidestep the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Introduced more recently, PEPs enable unrelated employers to participate in a collective 401(k) plan administered by a pooled plan provider (PPP). This structure streamlines the regulatory process and reduces costs, making it appealing for Gilbert, AZ businesses seeking to simplify their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, all while maintaining adherence to regulations. Moving to one of these plans may be particularly attractive for small companies in Gilbert, AZ, who want to offer a 401(k) but find the costs and paperwork challenging.
Working with the Right Gilbert, AZ 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support changes everything. Partnering with professionals 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 working with the right specialists is crucial:
- Experience and Expertise: A highly experienced group will be familiar with the nuances of 401(k) audits, encompassing 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, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will partner with you to understand 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, enabling us to understand the specifics 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 take on much of the administrative burden, allowing your HR and finance teams the freedom to concentrate on other tasks. Correct Capital makes the process smoother, 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 audit specific to your plan is no longer mandated, you're still obligated to adhere to 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 Gilbert, AZ is as painless as possible. With Correct Capital by your side, you’ll have the confidence that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Gilbert, AZ
Adhering to 401(k) audit regulations is both a legal requirement and an opportunity to verify your Gilbert, AZ company's retirement plan stays advantageous to your employees. Correct Capital’s knowledge of helping Gilbert, AZ businesses navigate the 401(k) audit helps ease the burden, letting you prioritize your business while avoiding fines for non-compliance.
Contact Correct Capital today to arrange a session 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, guaranteeing your plan is prepared for success. You can schedule a meeting with a member of our Gilbert, AZ advisor team, contact us online, or call us at 877-930-401(k) to begin.
