Whether being subject to an involuntary EBSA Audit, or undertaking a voluntary correction program (VCP), there are certain things a plan sponsor should be looking for (and looking out for) if they are going to have the EBSA nosing around their plans. The EBSA recently held an online seminar about things to anticipate in an EBSA investigation and here are some things I think are important to remember.
The general emphasis in an EBSA review falls into one of 6 categories: review of plan assets, reporting and disclosure, bonding, general plan operations, compliance with plan documents and remittance of employee contributions. The objective is to make sure that the plan is being operated in accordance with statutory guidelines. These six areas of focus are what the statutes generally require.
So what are the looking for? Well, they will certainly check to see if reporting requirements are satisfied, whether required disclosures have been made and whether the fiduciaries are properly bonded. They will also look at the transactions undertaken by the plan to see if there are any prohibited transaction or a failure to diversify plan investments. If the plan requires employee contributions, they will want to confirm that these contributions are remitted in a timely manner.
They will do this by reviewing the plan documentation. So the will want to see a plan document or trust agreement, the form 5500s for the past few years and the summary plan description. They will also want to see the summary annual report for the plan, copies of the bond and fiduciary insurance policies, provider services contracts and asset statements. You should also be ready to produce benefit statements and payroll/contribution records. If there are meeting minutes or formal resolutions related to plan administration, those will have to be produced as well.
So knowing what they will be looking for and what they want to see, plan sponsors should take this opportunity to (1) make sure they have the information that would be requested and (2) consider undertaking their own internal review to see if corrections should be made. The VCP process is designed to permit plan sponsors to fix things on their own without a full blown audit (and it is better to self-police then to get caught late in an audit). A diligent plan sponsor might take this opportunity to look at what would be looked at if there was an audit and see if there are some things that can be fixed.