Preparing for DOL Audit-expenses

[Guest Richard Tennenbaum]

Plan is being audited and the employer wants to pay for attorney's fees leading up to audit using the plan. The fees the employer wants to pay from the plan are specifically the fees charged by the attorneys to review the DOL request, assistance of client in preparing documents, advice to client during the audit. It seems inappropriate, but it doesn't seem to fit neatly into the 'settlor' example categories highlighted by the DOL guidance in DOL Guidance Settlor v. Plan Expenses Hypotheticals or Advisory Opinion 01-01A.

Anyone have any experience regarding this or could point me to some formal or informal guidance from DOL. I'm advising against it, but I'd love any input you all could offer.

[Guest bostonborn]

Do you know if this is a routine audit or if it is being audited because of a participant call to the DOL, etc.

I am just wondering why the need for an attorney expense just to read a DOL request for their items, making copies of their requests, etc. Everything is so straightforward on the DOL requests for info.

I have done tons of these, never had a problem. Granted its no fun to make copies of the eight million items that they ask for, but its easy. Certainly not something you would need an attorney for.

Unless there is more behind the audit...

[Guest Richard Tennenbaum]

Boston: it is standard audit and request, but the employer has been winding down operations for 3 years; documents/records are a mess; remaining staff has no benefits experience....they need some guidance....

[GBurns]

So who is going to search for and get out the things that the attorney will review? Is he going to review the originals or is he going to be looking at copies?

In other words, it certainly seems like you will have to find and use clerical staff in order to be able to use the attorney's services. Why not use the same clerical staff to search for, find and make copies of whatever it is that is on the DoL request? That is exactly what you will be doing for the attorney isn't it?

[Guest bostonborn]

No doubt, the attorney cant do much for the client in terms of going into their office to find this stuff. I doubt he is digging through file cabinets or calling the payroll company for copies of records. And if he is just directing the client to call the payroll company, and then charging them for that service...yikes. All he is essentially doing is reading the client the DOL letter.

Just have them pull some reasonably intellegent staff person and put them on the job. This stuff is basic...I used to hand off responsibility for making all the copies of all that stuff to our receptionist. Granted once it was all put together in its huge pile, I would do a once-over. She certainly had no "benefit experience" but could put together copies of payroll records or copies of statements as well as anyone else. I cant imagine paying an attorney fee for it.

Not that this answered your initial question, but I wonder if the issue is a mute point...does the employer realize that this really isn't a big enough deal to require an attorney?

[BeckyMiller]

Since the initial post requested input regarding whether such fees could be paid out of plan assets, my advice would be no. The Plan Administrator is supposed to retain the records necessary to the administration of the plan. It is true that if such records had been created on a timely basis, the cost of much of such work could have been an expense of the plan. But, here it sounds like there are going to be extra charges because of the failure to retain such records. That just doesn't feel right to me as an appropriate plan charge.

But....I am not an attorney. Just an old ERISACRAT.

[GBurns]

..."old.." ??

I love the ERISACRAT (ERISAcrat). Good play.

[Locust]

Several posters to this thread say in essence that getting an attorney involved for a "simple" DOL inquiry is a waste of money. That is a stupid statement. In my experience most serious problems with plans are caused by TPAs/consultants/investment advisers who think they know it all. A company's lawyer will have a better appreciation and broader perspective of the company's situation than others, and confidentiality protections could be absolutely vital. The attorney knows stuff about the company the plan advisers will never know, and to keep the attorney out of the loop is "penny wise but pound foolish."

[GBurns]

I do not disagree but it is also "penny wise but pound foolish." to pay the attorney for "assistance of client in preparing documents" which really the attorney will not be doing but rather some clerical person.

Plus we do not know the specifics of the information request or audit list.

Admitedly, I would worry more about the nature/scope of and reason for the audit rather than about the payment of legal fees. If it has reached the stage of an actual audit, there should have been previous information requests and correspondence etc which should have already needed the services of a lawyer and the finding and getting together of documents. That the concern is regarding payment and that it is at this rather late stage makes me wonder if the OP gives us enough info for rational opinions.

[Guest mjb]

Paying an attorney for assistance in complying with a DOL audit request is a responsible expenditure especially under ther circumstances described above. Audit requests are frequently overbroard and ask for documents/ information that is not available or beyond the s/l for retention. I have been in situations where HR staff was dismissed or left in the wake of mergers/ bankruptcies and counsel was needed to direct temporary staff/leased employees to respond to audit requests. Any one who has been involved in an audit can attest that there is more involved than just copying documents requested. Reasonably intelligent people who dont know what they are doing will create problems for the client because their ignorance of the audit process will result in unnecessary time wasted and costs incurred. Without getting into the particulars of the process, a reasonable solution would be for the employer to split the attorneys costs with the plan, say 50-50, between time spent on reviewing the audit request and advising plan/personnel on how to comply with the audit and time spent on supervising the staff who will copy/prepare the requested information.

[Guest Richard Tennenbaum]

Frankly, Burns, I'm having a hard time taking you serious given the title of a website you have under construction. You have taken one phrase, 'preparation of documents' and ran with it.

[GBurns]

Was I the only one who "ran" with an item?

I have a hard time with you using the title of a proposed website to determine anything about anything. Maybe you will next make decisions about other things by considering my last name.