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All but the smallest businesses today are generally expected to offer employees \u201cbig picture\u201d benefits such as health insurance and a retirement plan. Among the risks of doing so is that many popular plan types must comply with the Employee Retirement Income Security Act (ERISA). That means lots of rules and much documentation.<\/p>\n
No matter how careful your company is with ERISA compliance, it could receive a request from the U.S. Department of Labor (DOL) for plan-related documents. Such a request usually initiates a DOL civil investigation \u2014 commonly referred to as a \u201cplan\u00a0audit.\u201d<\/p>\n
The first rule of the day is: Don\u2019t panic! The second is to respond in a timely fashion. Here are the basic steps that a DOL plan audit will usually\u00a0take:<\/p>\n
Initial document request.<\/strong> Generally, a plan sponsor learns of an audit when it receives a\u00a0letter or phone call from the DOL\u2019s Employee Benefits Security Administration (EBSA) advising those responsible for the plan \u2014 typically referred to as \u201cplan officials\u201d \u2014 of the investigation and requesting a detailed list of documents. The investigation may be general in nature or target a specific\u00a0issue.<\/p>\n On-site review and interviews.<\/strong> The investigator may arrange to visit the plan sponsor\u2019s offices and could request additional documents for review during the visit, such as payroll and claims processing records. Often, the investigator will also interview plan\u00a0officials.<\/p>\n Investigation findings.<\/strong> If the investigator finds no ERISA violations, EBSA will send a\u00a0closing letter stating that the investigation is complete, and no further action is contemplated. If the investigator does find violations, EBSA will issue a voluntary compliance notice letter identifying the violations and inviting plan officials to voluntarily make corrections.<\/p>\n Corrections and settlement.<\/strong> Whenever possible, EBSA seeks voluntary compliance through full corrections of identified violations and restoration of plan losses. After negotiating corrective actions with plan officials, the agency issues a detailed settlement agreement.<\/p>\n A typical agreement requires evidence of corrections and provides that, if EBSA determines that the agreement\u2019s terms have been fulfilled, no further enforcement action will be taken regarding the specified violations. When voluntary compliance isn\u2019t achieved, EBSA may refer a case to DOL attorneys for litigation. Some situations are inappropriate for voluntary correction \u2014 such as those involving fraud, criminal misconduct, or severe or repeated fiduciary violations.<\/p>\n Fiduciary violations.<\/strong> ERISA imposes a mandatory 20% penalty on any amounts recovered from a fiduciary or other person for a fiduciary breach, including amounts recovered under a settlement agreement. Generally, EBSA assesses the penalty in a separate letter, though the penalty may be addressed in the settlement agreement.<\/p>\n Closing letter following corrections.<\/strong> After EBSA confirms that corrective action has been completed and any penalties have been paid, it will send a closing letter indicating that compliance was\u00a0achieved.<\/p>\n The steps described above could be completed in a matter of weeks or take a year or more.\u00a0It all depends on factors such as complexity of plan design, issues identified in the\u00a0investigation and number of potential violations. The availability of documents and individuals for interviews, as well as how cooperative your company\u2019s plan officials are with\u00a0EBSA, will also affect the duration and severity of the investigation.<\/p>\n Again, if your business receives notification about a DOL plan audit, address the inquiry immediately. Failure to provide requested documents to EBSA can lead to a penalty assessment. A prompt and cordial response, on the other hand, can establish a positive rapport with the investigator.<\/p>\n Above all, obtain the assistance of experienced advisors and legal counsel. Contact us for further information, as well as for support throughout the audit\u00a0process.<\/p>\n \u00a9 2023<\/em><\/p>\n <\/body> All but the smallest businesses today are generally expected to offer employees \u201cbig picture\u201d benefits such as health insurance and a retirement plan. Among the risks of doing so is that many popular plan types must comply with the Employee Retirement Income Security Act (ERISA). That means lots of rules and much documentation. No matter […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,14,10],"tags":[8,11,12],"class_list":["post-16736","post","type-post","status-publish","format-standard","hentry","category-articles","category-business","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16736"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16736\/revisions"}],"predecessor-version":[{"id":16737,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16736\/revisions\/16737"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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