401(k) Audit Services in Jackson, MS. For Jackson, MS businesses offering their employees retirement plans, completing a 401(k) audit can feel like a daunting task. Between regulation from the Department of Labor (DOL) and IRS, gathering a large amount of paperwork, and ensuring that your plan isn’t “top-heavy”, there is a lot to keep track of. However, with the right support, the 401(k) audit doesn’t have to feel like a burden and interfere with your company’s daily operations.
At Correct Capital, we understand that 401(k) audits can create significant headaches even though they are mandatory. Our team will work with you for everything from document collection to meeting Form 5500 deadlines. Whether you're navigating your first audit in Jackson, MS, or hoping to optimize a previously cumbersome process, we're here to make it as simple and stress-free as possible. 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.
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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 Jackson, MS companies with more than 100 eligible participants in their 401(k) plan. Note: Even if you do not have more than 100 employees actively participating in the plan, you still need an audit if there are 100 who have the option to participate if they wanted. The audit ensures that the retirement plan follows the regulations established by the Department of Labor (DOL) and the Employee Retirement Income Security Act (ERISA). It evaluates the plan’s overall financial health, ensuring that contributions, distributions, and operations are properly documented.
While necessary to meet legal requirements, 401(k) audits can be complex and time-consuming. Correct Capital helps Jackson, MS businesses get ready for these audits by assisting with document collection, helping clarify compliance testing, as well as other audit processes. With the right support, handling the audit process can become a much easier process.
Why are 401(k) Audits Necessary for Jackson, MS Companies?
You need to undergo a 401(k) audit for a variety of reasons, ensuring that retirement plans adhere to federal regulations and safeguard both the employer and employees. Here’s why they are necessary:
- Compliance with DOL and IRS Regulations: Audits ensure that your 401(k) plan adheres to all legal requirements mandated by the Department of Labor (DOL) and the IRS, particularly under the Employee Retirement Income Security Act (ERISA).
- Preventing Discrimination: The audit verifies whether the plan disproportionately benefits higher-paid employees (often known as “top-heavy” testing) to guarantee fairness across all participants.
- Identifying Operational Issues: Audits often expose errors in contributions, distributions, or additional plan operations, enabling you to resolve these issues so they don't lead to fines.
- Filing Form 5500: The audit ensures the accurate and on-time filing of Form 5500, an annual report that outlines the plan’s financial status, needed to uphold compliance with DOL and IRS regulations.
- Contribution Limits: The audit verifies that employer and employee contributions stay within IRS limits for the year, helping to avoid excess contributions that may result in penalties.
- Fee Reasonableness: Auditors may evaluate plan fees to verify they are reasonable and aren’t unnecessarily high for participants. Excessive fees may prompt compliance concerns and negatively impact the long-term growth of employee retirement savings.
- Fiduciary Oversight: The audit confirms that Jackson, MS employers are acting in the best interest of plan participants, meeting their fiduciary responsibilities as outlined in ERISA.
- Verification of Plan Documentation: Ensuring 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 Jackson, MS employers could face, based on the specific details 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 most detailed 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: 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 does not need to audit the investment information certified by the financial institution, which can significantly reduce the audit’s complexity and cost. This can make it a more attractive option for some Jackson, MS businesses, if they satisfy the criteria.
The kind of audit your plan needs is determined by your plan’s specific details, like the nature of its investments. At Correct Capital, we can help you determine which type of audit your plan requires and make sure you're ready for whichever process is necessary.
401(k) Audit Pain Points for Jackson, MS Employers
While 401(k) audits are required to meet legal obligations, they can create major obstacles for Jackson, MS employers, notably those managing larger plans. Here are some of the key pain points that companies deal with:
- Document Collection and Management: Collecting the required files, such as account statements, tax returns, and employee data, can be a lengthy process. Employers frequently have difficulties to sort through and file the necessary paperwork, especially for larger, more complex plans.
- Compliance with Changing Regulations: Staying up to date with evolving DOL, IRS, and ERISA regulations is difficult. Compliance missteps can cause audit failures, sanctions, and expensive fixes in the long run.
- 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 takes HR professionals, business owners, administrators, and others out of their core responsibilities, heightening pressure and diverting attention from day-to-day operations.
- 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. Late submissions could cause penalties and create further issues for the company.
At Correct Capital, we understand these challenges and offer customized assistance to make the audit process in Jackson, MS more efficient. From assisting 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 Jackson, MS employers looking to lower the complexity of a 401(k) audit, Multiple Employer Plans (MEP) and PEPs can offer relief. These plans permit various businesses 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, reducing the cost and complexity of managing and auditing individual plans. This setup enables Jackson, MS businesses to divide the administrative responsibilities and possibly eliminate the annual 401(k) audit altogether.
- Pooled Employer Plans (PEP): Recently established, PEPs enable unrelated employers to participate in a collective 401(k) plan overseen by a pooled plan provider (PPP). This structure simplifies compliance and reduces costs, making it a desirable option for Jackson, MS businesses looking to streamline their retirement offerings.
Both MEPs and PEPs can substantially decrease the costs and time required for audits, while still ensuring compliance with federal regulations. Transitioning into an MEP or PEP may be highly beneficial for smaller firms in Jackson, MS, who wish to provide a 401(k) plan but are overwhelmed by costs and admin tasks.
Working with the Right Jackson, MS 401(k) Audit Team
401(k) audits can be daunting, but choosing the right support can make all the difference. Working with a team that has a firm grasp of both technical and practical elements of the audit process reduces the time and pressure you face. Here’s why having the right experts on your side is important:
- Experience and Expertise: A skilled team understands the nuances of 401(k) audits, encompassing full-scope and limited-scope audits. We can guide you through the documentation process and pinpoint potential improvements within your plan.
- Compliance Assurance: The right team will help you stay on top of evolving regulations, confirming your plan adheres to all regulations.
- Tailored Support: All 401(k) plans are distinct. An experienced team will partner with you to understand the unique needs of your plan and help you prepare for your specific audit requirements. Correct Capital is responsible for managing over 37 plans in both small and large companies, representing 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 proper team will shoulder a lot of the admin work, giving your HR and finance teams to focus on other priorities. Correct Capital simplifies the entire 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 audit specific to your plan is no longer mandated, you're still obligated to adhere to all the rules and regulations, though with a reduced administrative workload after plan year end.
*as of March 2024
Partnering with a knowledgeable, reliable team is crucial for guaranteeing your 401(k) audit in Jackson, MS goes as smoothly as possible. With Correct Capital by your side, you’ll feel secure that your audit will be completed efficiently and accurately.
Call Correct Capital for Help With Your 401(k) Audit in Jackson, MS
Meeting 401(k) audit requirements is both a regulatory obligation and an opportunity to ensure your Jackson, MS company's retirement plan continues to offer maximum benefit to your employees. Correct Capital’s experience in assisting Jackson, MS businesses complete the 401(k) audit reduces the strain, allowing you to focus on your business while preventing penalties for non-compliance.
Contact Correct Capital today to arrange a session and we'll guide you prepare for a smooth, efficient audit. 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 Jackson, MS advisor team, contact us online, or call us at 877-930-401(k) to begin.
