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
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
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,
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 hasnt 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 plans 5500. Dont do it yourself. Provider fees for this service are very reasonable.
Robert C. Lawton is President of