Resolving Years of 401(k) Compliance Issues at HVAC Services Company

With its rapid acquisition-driven growth, a commercial equipment services company accumulated several years of 401(k) plan compliance findings that uncovered late deposits, miscalculated amounts, and uncaptured contribution histories for acquired employees, among other issues. 

Each year, the findings were acknowledged, but their volume and complexity, together with competing priorities, pushed them into the next audit cycle. Meanwhile, inconsistent payroll processes across entities continued, records remained unreconciled, and more errors stacked up. Left unresolved, the company’s compliance gaps increased the risk of regulatory penalties and participant complaints or claims.

SBA first reviewed each audit finding to confirm if the error was still valid, determine the cause, and provide a solution. For example, some matching and true-up miscalculations had to be corrected, while others could be discarded because the employee left before becoming vested, rendering the errors invalid. 

Root cause analysis was performed for all corrected errors and documented for the HR and payroll teams. Some of the largest errors uncovered included a year in which IRS maximums were not updated in the payroll system, an incorrect calculation of the annual true-up match, unreconciled differences between contribution amounts withheld through payroll and amounts posted by the 401(k) recordkeeper, and pre-acquisition deferrals for newly acquired employees that were not entered in the payroll system, resulting in many exceeding IRS deferral and company match limits. 

SBA next mapped the company’s payroll processes end-to-end to identify the causes of ongoing errors and compliance blind spots. SBA also helped implement a weekly reconciliation for the HR team to confirm payroll against the 401(k) recordkeeper’s postings. The team added prior-contribution tracking to the onboarding checklist for future acquisitions, ensuring existing contribution history is carried over for newly acquired employees.

What took years to accumulate was not a quick fix; it required time and a methodical approach to resolve. Every audit finding was addressed with corrections made for both under- and over-contributions, true-up match calculations, and IRS limit updates. The engagement also mapped payroll processes to ensure continued compliance and to support the integration of future acquisitions.

The company now has a repeatable compliance framework rather than a one-time fix.