401(k) Audit Services in Hialeah, FL. For Hialeah, FL businesses offering their employees retirement plans, navigating a 401(k) audit can feel like an uphill battle. Between regulation 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 can be made much easier and affect your daily business activities.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. Our team will partner with you with every aspect of document collection to meeting Form 5500 deadlines. Whether you're preparing for your first audit in Hialeah, FL, or looking to streamline a previously inefficient process, we're here to make it as simple and stress-free as possible. You can book 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.
What is a 401(k) Audit?
A 401(k) audit is an annual review mandated for Hialeah, FL companies with more than 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 have the option to participate if they wanted. The audit confirms that the retirement plan adheres to the regulations mandated 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, distributions, and operations are properly documented.
While necessary to meet legal requirements, 401(k) audits can be complex and lengthy. Correct Capital supports Hialeah, FL businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, and other related tasks. With the right support, getting through the audit can become a far more manageable task.
Why are 401(k) Audits Necessary for Hialeah, FL Companies?
You must 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 you need them:
- Compliance with DOL and IRS Regulations: The purpose of audits is to confirm that your 401(k) plan adheres to 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 does not unfairly favor higher-paid employees (often known as “top-heavy” testing) to ensure the plan treats all employees fairly and equally.
- Identifying Operational Issues: Audits can uncover 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 guarantees the accurate and on-time filing of Form 5500, a required document summarizing 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 do not exceed IRS limits for the year, reducing the risk of excess contributions that might trigger penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to confirm they are reasonable and aren’t unnecessarily high for participants. Overpriced fees could lead to compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit verifies that Hialeah, FL employers are acting in the best interest of plan participants, fulfilling their fiduciary responsibilities as required by ERISA.
- Verification of Plan Documentation: Verifying 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 main categories of 401(k) audits that Hialeah, FL employers may encounter, 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 most detailed audit mandated for most larger 401(k) plans. In a full-scope audit, the external auditor reviews all aspects of the plan, such as financial statements, adherence to Department of Labor (DOL) and IRS regulations, and participant data. The auditor examines supporting documentation for contributions, distributions, and other transactions to verify that everything is accurate and in compliance.
- Section 103(a)(3)(C)) Audit: Formerly known 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 is not required to audit the investment information endorsed by the financial institution, which can greatly lessen the audit’s complexity and cost. This could make it a more attractive option for some Hialeah, FL businesses, if they satisfy the criteria.
The kind of audit your plan needs is based on your plan’s particular characteristics, such as the nature of its investments. At Correct Capital, we are able to assist you understand which type of audit your plan requires and help you be well-prepared for both audit types.
401(k) Audit Pain Points for Hialeah, FL Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Hialeah, FL employers, notably those overseeing more substantial retirement plans. Here are some of the key pain points that businesses face:
- Document Collection and Management: Assembling the necessary paperwork, such as account statements, tax returns, and employee data, can be time-consuming. Employers frequently have difficulties to organize and file the necessary paperwork, particularly with larger, more complex plans.
- Compliance with Changing Regulations: Keeping pace with shifting DOL, IRS, and ERISA regulations is difficult. Compliance errors can lead to audit failures, fines, and pricey amendments later on.
- Discrimination Testing: Ensuring that the plan isn’t top-heavy demands thorough checks for compliance and can lead to additional documentation and reporting.
- Time and Resource Demands: Audit preparation pulls HR professionals, business owners, administrators, and others away from their core responsibilities, increasing stress and diverting attention from regular business activities.
- Form 5500 and Timely Submissions: Many businesses struggle to file Form 5500 correctly and before the deadline, which is essential to 401(k) compliance. Late submissions may lead to 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 Hialeah, FL 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 Hialeah, FL employers seeking to reduce the administrative burden of a 401(k) audit, Multiple Employer Plans (MEP) and Pooled Employer Plans can provide solutions. These plans enable different employers to participate in a unified 401(k) plan, frequently removing 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 enables Hialeah, FL 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 managed by a pooled plan provider (PPP). This structure streamlines the regulatory process and cuts costs, making it attractive for Hialeah, FL businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can significantly reduce audit-related costs and time commitments, all while maintaining adherence to regulations. Moving to one of these plans may be particularly attractive for small companies in Hialeah, FL, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Hialeah, FL 401(k) Audit Team
401(k) audits can be daunting, but having the right team in place can greatly improve the process. Working with a team that is well-versed in both the technicalities and practicalities of the audit process can save you significant time and stress. Here’s why partnering with the right experts matters:
- Experience and Expertise: A team of experts understands the complexities of 401(k) audits, including 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 ensures you keep up with evolving regulations, making sure your plan complies with all required guidelines.
- Tailored Support: Every 401(k) plan is different. An experienced team will collaborate with you to understand the unique needs of your plan and help you prepare 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, which allows us to understand the nuances of any company 401(k) plan.
- Saving Time and Resources: Getting ready for a 401(k) audit can consume a lot of time from day-to-day operations. The ideal support will take on much of the administrative burden, giving your HR and finance teams to focus on other priorities. Correct Capital makes the process smoother, reducing the pressure on your internal team.
- MEPs and PEPs Expertise: For businesses enrolled in an MEP or PEP, while an individual plan audit is no longer necessary, you're still required to comply with all the rules and regulations, but with fewer administrative responsibilities after plan year end.
*as of March 2024
Working with a well-informed, reliable team is crucial for guaranteeing your 401(k) audit in Hialeah, FL is as painless as possible. With Correct Capital as your partner, you’ll feel secure that your audit will be conducted thoroughly and on time.
Call Correct Capital for Help With Your 401(k) Audit in Hialeah, FL
Adhering to 401(k) audit regulations is both a regulatory obligation and an important way to confirm your Hialeah, FL company's retirement plan stays advantageous to your employees. Correct Capital’s experience in assisting Hialeah, FL businesses complete 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 ensure your audit goes smoothly and efficiently. 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 Hialeah, FL advisor team, contact us online, or call us at 877-930-401(k) to begin.
