A representative from the Atlanta Regional Office for the Department of Labor recently spoke at an Atlanta Bar Association luncheon and provided some insight into the Employee Benefits Security Administration’s enforcement priorities and some other interesting facts:

  • With regard to the need for fiduciary training that we wrote about previously, the representative confirmed that investigators generally only require proof of training if the plan sponsor/administrator has agreed to receive training as part of a settlement agreement following an audit.  However, they generally will inquire as to whether the plan sponsor/administrator has had fiduciary training as part of a routine audit.
  • The representative also confirmed that EBSA has started to audit for health care reform compliance (at least for the provisions that are currently effective).
  • They are also looking at HIPAA compliance for both plan sponsors and service providers, and particularly HIPAA portability (e.g., creditable coverage notices, and the like) compliance by service providers.  A focus on creditable coverage notices seems unusual since PPACA will eliminate preexisting conditions in 2014.
  • Timely deposits of 401(k) contributions, a long-time focus of the DoL, continues to be a priority.   In this regard, the representatives noted that they generally interview the plan sponsor to determine what is timely based on the complexity of the plan sponsor’s payroll(s).  However, they reiterated that the 15th day of the month after the contributions are collected is not a safe harbor.
  • They are taking hard look at plan loans to make sure they are administered to meet the necessary criteria for the ERISA prohibited transaction exemption.  The representative noted to make sure your plan allows for loans if loans are being made from the plan (Yes, this seems obvious, but you’d be surprised).
  • Audits of employee stock ownership plans (ESOPs) continue to be a national priority, particularly with respect to valuations.  While a great many ESOPs are well-functioning, there is unfortunately ample opportunity for mistakes and even abuse, which puts them under DoL scrutiny.

In terms of takeaways for plan sponsors, they strongly encourage plan sponsor to read the service provider statements they receive, rather than just paying them without reviewing them.  When issues arise during audit, they also are prone to ask, “did you read the plan?” which suggests that it might be a good idea to read it (as difficult as that may be in spots).  Finally, they noted that if you show amounts as “other assets” or “other income” on the Schedule H for your Form 5500, you are likely to hear from them.

Of course, these are informal, non-binding views of the representative and cannot be taken as authoritative statements of the DoL/EBSA.  Nevertheless, they are informative of the types of items that investigators may be looking for if they come knocking on your door.

A list of other DoL/EBSA enforcement priorities is available here.