The best Rochester accountant from Rizzo & DiGiacco can make retirement plan audits as painless as possible so the answer is a resounding “Yes!” But there are certain things that benefit plan sponsors must know in order to make the audit as painless as possible, of which the following are the most important.
Filing Accurate Form 5500s
Keep in mind that employee retirement plans are heavily regulated by the Department of Labor (DOL) for obvious reasons. Such heavy regulation involves audits, which involves reviews of audited financial statements, Form 55 filings, and deposit timeliness as well as employee education and compensation deferrals. Such audits can be as rigorous as any audit performed by the best Rochester CPA on financial statements because the organization’s well-being in general and the employees’ welfare in particular are at stake here.
Your trusted Rochester accountant will ensure that, indeed, the audit filing was accurate in every way that matters. Why is it so important? It must be emphasized that many government agencies rely on the filing for their own purposes such as:
• The Department of Labor reviews whether the plan reporting complies with the Employee Retirement Income Security Act (ERISA)
• The and Human Services and Department of health use the data from the Form 5500 to analyze trends in retirement plans and benefits for policy-making purposes.
You will be asked numerous questions during the course of the review so the more accurate your filing, the better the audit outcome will be. Your human resource representative should work with your trusted Rochester accountant to file Form 5500 to avoid late and/or incorrect filings, both of which are red flags for the department.
Preparing for Audit
Before preparing for an audit, you must first ask yourself whether you are even required to undergo said audit; ask your trusted Rochester CPA in this regard. In general, nonetheless, an audit is based partly on the number of employees eligible to participate in the retirement plan at the beginning of the year.
If your retirement plan has at least 100 employees including terminated employees with active account balances in it, then you should plan for an audit. You should then be informed of the DOL’s requirements of plan sponsors so that you can prepare for it.
The most common requirements are as follows:
• Deposit timelines
Deposit the withholdings from employees including employee deferrals, Roth contributions, and participant loans with the trustee and then into the participant accounts on time; the DOL will be determining whether the employees are indeed accumulating their owned earnings. The timing of the withholdings should also be consistent because both the independent Rochester accountant and DOL agent will question it otherwise.
• Compensation deferrals
The DOL will determine the accurate calculation of the contributions on both the parts of the employer and employee, said contributions of which should be based on the appropriate base wage; it can be a challenge especially when you have multiple pay codes.
With so many more aspects to retirement plan audits to consider, hiring the best Rochester accountant for the purpose is strongly advised. Think of said professional as your valuable partner in ensuring a relatively painless retirement plan audit where the DOL will look favorably upon your plan.
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