According to one industry publication, there were 3,677 Department of Labor qualified retirement plan audit investigations in 2013. Settlements related to violations totaled $1.7 billion in plan reimbursements and fines. Following are some suggestions that may help you avoid a DOL audit of your retirement plan:

1. Respond to employee inquiries in a timely way. The most frequent trigger for a DOL audit is a complaint received from an employee. These complaints can originate from terminated employees who feel poorly treated or existing employees who feel ignored. Make sure you are sensitive to employee concerns and respond in a timely way to all questions. Be very professional in how you treat those individuals who are terminated – even though in certain instances that may be difficult.

2. Improve employee communication. Often employee frustrations come from not understanding a benefit program – or worse, misunderstanding it. If you are aware that employees are frustrated with a plan or there is a lot of behind-the-scenes discussion about it, schedule an education meeting as soon as possible to explain plan provisions.

3. Fix your plan. If the DOL decides to audit your retirement plan, statistics show that it almost always finds something wrong. Many times plan sponsors are aware that a certain provision in the plan is a friction point for employees. Or worse, the plan is broken and no one has taken the time to fix it. Contact your benefits consultant, recordkeeper or benefits attorney to address these trouble spots before they cause an employee to call the DOL.

4. Conduct your own audit. Many plan sponsors have found it helpful to conduct their own audits of their plans, or hire a consulting firm to do it for them. If management hasn’t been responsive to your concerns about addressing a plan issue, having evidence to present during a DOL audit be very convincing.

5. Make sure your 5500 is filed correctly. The second most frequent cause of a DOL audit is problems which are identified on the annual Form 5500 filing. The most common 5500 errors include failing to follow EFAST 2 Electronic Filing Guidance, not attaching all required schedules and failing to answer multiple-part questions. Ensure that your 5500 is being filed by a competent provider and that it is filed on time. Most plan sponsors either use their recordkeeper or accountant to file their plan’s 5500. Don’t do it yourself. Provider fees for this service are very reasonable.

DOL audits are generally not pleasant. Because audits are typically generated by employee complaints or Form 5500 errors, auditors have a pretty good idea that something is wrong. As a result, plan sponsors should do everything they can to avoid a DOL audit.


Robert C. Lawton is President of Lawton Retirement Plan Consultants, LLC, an RIA firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be contacted at or 414.828.4015.

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