Over the past several years, governmental audit activity has been on the rise. In 2013, the Department of Labor (the “DOL”) reportedly hired 1,000 new ERISA plan auditors. With upcoming changes in the benefits world, including the significant curtailment of the IRS’s determination letter program, we expect that audits will only become more common. Here is a brief summary of “hot” audit topics for both retirement and health and welfare plans

  • Of late, DOL audits have an increased focus on retirement plan distributions – particularly to ensure that retirement plan administrators (i) make proper and timely distributions at normal retirement age (as defined by the plan) as well as required minimum distributions (age 70½ distributions) and (ii) take appropriate steps to locate missing participants or beneficiaries. Shortcomings in these areas could result in fiduciary liability and could catch the eye of either the IRS or the DOL. Prevent being surprised by an issue or audit by ensuring that your participant data – particularly with respect to age and location – is clean and up to date. In addition, ensure that steps are taken to try to locate missing participants through a reputable locator service.
  • This spring, the Department of Health & Human Services Office for Civil Rights (the “OCR”) announced plans to begin its second round of Health Insurance Portability and Accountability Act (“HIPAA”) compliance audits. The second round of audits will consist primarily of remote desk audits; however, a select few lucky covered entities may face extensive on-site audits. OCR will use its newly revised, quite lengthy HIPAA Audit Protocol to conduct the assessments. If you sponsor a group health plan that is a covered entity under HIPAA, you can, and should, use the revised protocol to monitor ongoing compliance activities and improve your compliance program. Notification of an audit may be delivered by email, and if notified of an audit, you may have only a very brief period of time in which to produce the requested materials (e.g., 10 business days)