DOL Audit

[Belgarath]

Just curious about something. Situation is this:

A non-profit has an ERISA 403(b) plan. They came to us a couple of years ago - plan was a mess. Document out of compliance, no 5500 forms EVER filed, ACP testing was never done, etc., etc. - huge clean-up VCP project, and 5500 forms (audited) filed under DFVCP, etc., etc.

They just got notified that they are going to have the plan audited by the DOL. I'm curious as to whether this is purely random, or if the DFVCP filing triggered this audit - not that it matters. Any thoughts on this?

[rr_sphr]

just finishing up a 401(a) 2015 IRS audit (linked to a 403b plan).  It was tough.  There were quite a few issues and in the end we've ended up in CAP for 2 issues...haven't heard what the fines will be.

2015 was the year my predecessors changed recordkeepers and then combined the 401a, 403b and 403b TDA into a 401k at the start of 2016.  I suspect the disconnect between $s of distributions on the 5500 vs the 1099s kicked ours off, but the IRS auditor claimed it was just a random audit.  Personally I don't think they are ever totally random.

Hopefully you all have great documentation on the clean up project -- make sure all your signed amendments are in order from the past - even if the new plan document takes them into account. I was a bit surprised at the history that was wanted there.

We eventually had to take a hard stance with the auditor....it sucked and has been almost a year to get to this point....and it's not totally closed yet.

[Bob the Swimmer]

Great question---DOL gets over 100k calls per year from disaffected participants, disgruntled ex-employees and others. Some of these generate audits and even litigation. Many of the audits are generated by their computer review of 5500s---usually a significant inconsistency n the filing from year to year or answering the PT questions a certain way. Several years back they did a questionnaire which was "voluntary" on 457(b) plans and if you answered it a certain way, you got audited. That's how voluntary it was. They do not have the staff that IRS has, so audits are much rarer at their end.

In several dozen of these DOL audits over my career, they have never told us why they were auditing whereas sometimes the IRS agent has told us.

Hope that helps--

BOB

[Kevin C]

I've had several DOL Investigators tell me they are not allowed to tell you why they are investigating the plan.  Sometimes you can figure it out from the circumstances, or the information they request.  We had a client receive a call from the DOL about a participant complaint and the client told the investigator to stop harassing her and to go bother someone else.  Surprise, surprise, they soon got a letter announcing a visit from the DOL.  When we met with the investigator, the first thing the client said was I'm sure you are here because of what I told you when you called.  The investigator almost managed to keep a straight face and did not respond. 

My experience with the IRS is also that they will sometimes tell you.   

[Belgarath]

Thanks.