DOL audit of TPA Firm ?

[LauraERPA]

Has anyone heard of the DOL auditing a TPA firm???

[david rigby]

Does the DOL have any jurisdiction over TPA providers?

More likely, the DOL has noticed a "pattern" that coincides with a particular TPA, and is auditing selected plans that are serviced by that TPA.

Which is it?

[Peter Gulia]

Investigations of service providers has been PWBA/EBSA official policy since at least 1990, and was reaffirmed in 2000.

The idea is that finding a problem at a service provider might lead to improvements for many plans.

Also, although the preceding Administration's proposed rule to interpret ERISA 408(b)(2) is not adopted, some practitioners have observed that EBSA has required similar disclosures and protections as conditions in a settlement of an investigation.

2000008504.pdf

[LauraERPA]

Does the DOL have any jurisdiction over TPA providers?

More likely, the DOL has noticed a "pattern" that coincides with a particular TPA, and is auditing selected plans that are serviced by that TPA.

Which is it?

We received a call from the DOL Auditor, but are awaiting specifics on the scope of the audit. The auditor informed us they were auditing our "TPA operations" and it would take 2 weeks.

We've been through audits with the IRS and DOL regarding specific plans and had no problems. We are confident in our operations, but this request just seems unusual and did not come through a specific client. What is their jurisdiction over TPAs? What actions should we take to insure client confidentiality?

[Peter Gulia]

ERISA 504(a) [29 U.S.C. 1134(a)] provides the Secretary of Labor broad investigation powers, including powers regarding service providers.

To narrow the scope of the inquiry, use a lawyer who has experience managing EBSA investigations of service providers. (Most of the people who have that experience are in-house at recordkeepers and investment complexes; but a handful are in outside law practice.) To pursue available confidentiality and privacy protections, use a lawyer who has experience with ERISA and the Freedom of Information Act.

[Guest SuzanneW]

I agree with the suggestion to talk to an attorney familiar with ERISA section 504 investigations. ERISA section 504, also known as 29 USC 1134, is available at http://www4.law.cornell.edu/uscode/29/usc_...34----000-.html for anyone that wants to take a look at it.

I am really interested if anyone else has been contacted by the DOL for an audit. ERISA section 504(a)(2) permits the DOL to enter and inspect if the DOL has reasonable cause to believe that a violation may exist. If this is a new project by the DOL auditing TPA firms across the country, I am really curious about what the DOL's reasonable cause justification for the audit is.

What has peaked my curiosity is that the contact was made by the DOL. I'm working on a law review article about practice before the IRS and DOL as it relates to ERPAs, so I acknowledge I might be a little too fascinated by this topic at this point. I can understand the IRS invoking their authority under Rev. Proc. 2005-16 to request information from a TPA firm related to a larger audit of a plan document provider, or the IRS contacting a TPA firm regarding a Circular 230 issue relating to the TPA firm, but the DOL lacks either one of these justifications for the audit of a TPA firm.

- Suzanne L. Wynn, Esq., LLM Tax.

Qualified Pension Consulting Inc.

swynn@qualifiedpensionconsulting.com

[Ron Snyder]

My firm was audited by EBSA a couple of years ago. They required that we make certain changes in our administrative forms and procedures, but otherwise were not particularly difficult to work with. My recommendation is that you try to see from the tenor of the data request and the scope of materials requested whether they are going through the motions, or are intending to go after you for some perceived abuse. If you sense that they are after you, I endorse Suzanne's recommendations. If it is a simple audit of your procedures and forms and you have nothing to hide, you may be able to get by without needing a top-notch ERISA attorney.

[LauraERPA]

We received the DOL letter today and the scope of the audit is quite invasive. They refer to it as a Section 504 investigation. To summarize, they have requested the following:

• List of owners and officers to include personal contact information and asset listings
  
• List of all clients (active and terminated) since 2006 to include contact info, participant count and assets
  
• Marketing materials
  
• All contractual agreements with any entity
  
• Operation manuals, policies, guidelines, etc.
  
• List of 6 largest clients to include all correspondence, documents, files, financial records, participants, assets, etc.
  
• All corporate bank accounts and records
  

They also may expand the investigation to include clients/activities prior to 2006.

[Guest Sieve]

Based on the request for client info and corporate bank account info, I don't think you should go forward without attorney involvement.

[Ron Snyder]

I agree wholeheartedly. Get yourself a good lawyer, preferably a good labor lawyer. My business attorney has a partner that was a former Administrator of EBSA (when it was called PWBA). If you could find someone like that it would be ideal.

[Monica Barnard]

OH yeah, I've been through this, but it's been YEARS ago. The auditor randomly picked 5-6 clients to review files. Of course, one of the clients picked, we knew already had problems and had documented recommended solutions to the client. The DOL auditor found nothing out of line with what our firm did, and I actually ended up using him as a consultant when he retired.