DOL ERISA audit looming

[Guest Troy S.]

Hi there,

Just found out that we have a DOL audit headed our way in about a month. We are a Trust Company provider of plan administration and trust services for qualified DC and Non-Qual deferred comp plans. Does anyone have any recent experience with a DOL audit? If so, what were the focus areas? I feel good overall about my department's documentation (plan doc's, procedure manuals, etc.), but what are they possibly going to find that I am not thinking about?

Thanks for any help!

[J Simmons]

Troy,

My experience in representing clients that have had DoL ERISA audits is that, if it is a 'spot' check, they are primarily assessing the attitude towards compliance and whether there's a real effort by the employer and plan officials to meet their compliance responsibilities, given that what they do affects employees' retirement savings.

I had an employer first contact me after receiving the audit notice. They brought 4 banker's boxes of records to my office four days before the audit. It was a mess. The employer's attitude about complying with plan rules was much less than stellar. I basically dropped all my other projects, compiled the records as best I could into the categories of documents listed in the audit notice and had them in piles on a table and on the floor around the perimeter of a conference room, each pile labeled and each in chronological order.

Then, the day before the audit, I took my new clients to the 'woodshed' and had them quite frightened. (There was a lot of 'holes' in the records.) Then I told them we needed to look cooperative and helpful, without looking obsequious.

During the audit, the DoL rep asked for certain numbers to be assembled (the DoL rep had discovered a couple of those 'holes'). I put my clients to the task of doing so in another room, while I continued to sit across from the DoL rep and retrieve whichever pile she asked for.

When the numbers were crunched and presented, the DoL rep looked at them, pointed out a couple of problems, then gave me and my clients a 5 to 10 minute explanation of the need for compliance and being vigilant. Then she covered a list of 6 or 7 items she wanted corrected, asked that we send her a letter representing that such were corrected and the mistakes wouldn't be repeated in the future and that she would then send a no-action letter closing the audit. She did.

While I can tell you this, I would first of all look at the Forms 5500 filed over the last 4 or 5 years for the plan being audited and see if anything looks odd or unusual. That might be what flagged this plan for audit.

Good luck.