Audit of a piece of a multiemployer plan?

[Guest Scubam]

Have a client who is interested in getting an audit done of just their organization's participation in a multiemployer defined benefit pension plan. Does anybody know how feasible this is and if it can be done in a cost effective manner? We are wondering how difficult it would be to get their data segregated out of the plan in an audit package or is it likely that everything would just be too comingled together within the multiemployer plan to make an efficient audit of one of the participants unlikely?

Any thoughts or guidance would be much appreciated.

[Effen]

What do you mean an audit of their participation? Are you looking to confirm the amounts you are sending are being properly credited by the fund, or are you looking for something different, like an estimate of your withdrawal liability?

The fund would have an outside auditor who should be auditing selected employers periodically. You may be able to ask them to move your company to the top of their list.

If you don't trust them, you should be able to ask you auditors to confirm the information with the fund.

If you are looking for an estimate of your withdrawal liability, you can ask the fund for an estimate, or hire an actuary to estimate it for you.

[Guest Scubam]

What do you mean an audit of their participation? Are you looking to confirm the amounts you are sending are being properly credited by the fund, or are you looking for something different, like an estimate of your withdrawal liability?

The fund would have an outside auditor who should be auditing selected employers periodically. You may be able to ask them to move your company to the top of their list.

If you don't trust them, you should be able to ask you auditors to confirm the information with the fund.

If you are looking for an estimate of your withdrawal liability, you can ask the fund for an estimate, or hire an actuary to estimate it for you.

Thanks for your quick response. Basically, the organization is looking to have an audit performed of the fund but which would just include their individual financial information just as if it were merely a single employer defined benefit pension plan.

[Effen]

I'm sorry, but I still don't really understand what you would like them to audit?

In a multiemployer fund, there isn't really anything to audit other than confirming that they are properly crediting your contributions. A multiemployer fund is not like a bunch of single employer funds. Everything is comingled into one pot - you can't really seperate one employer from the others.

Maybe a better question is what are they concerned with? Why do they think they want an audit performed?

Are you sure you aren't in a multiple employer plan?

[Guest Scubam]

I'm sorry, but I still don't really understand what you would like them to audit?

In a multiemployer fund, there isn't really anything to audit other than confirming that they are properly crediting your contributions. A multiemployer fund is not like a bunch of single employer funds. Everything is comingled into one pot - you can't really seperate one employer from the others.

Maybe a better question is what are they concerned with? Why do they think they want an audit performed?

Are you sure you aren't in a multiple employer plan?

Yes, you're right. It is a multiple-employer plan. i wasnt aware there was a difference. So then in this type of plan, could an audit be done of one of the participating organizations?

[Effen]

Oh, that is significantly different. Unfortunately I know very little about multiple-employer plans. Hopefully someone else will pick up the thread.

[Guest Scubam]

Oh, that is significantly different. Unfortunately I know very little about multiple-employer plans. Hopefully someone else will pick up the thread.

Thanks for your help. Yes, I've discovered there's a signifcant difference between a "multi-employer" plan and a "multiple employer" plan. You'd think they could have come up with a little bit different terminology to help avoid confusion.

[JohnCheek]

An audit of a multiple-employer plan is almost identical to an audit of a multiemployer plan, and there are very few differences in the operations of each plan. The main difference is that the multiemployer plan is maintained persuant to one or more collective bargaining agreements.

In both cases, employers make contributions to the plans, which are comingled with all other plan assets. Contributions from employer A are not segregated, and not designated to pay benefits only for employees of A. (In the case of multiple employer plans, I believe discrimination testing is done for each employer, rather than on a plan-wide basis).

It would be possible to audit parts of a multi- or multiple employer plan, such as contributions, eligibility, and benefits, which are specific to one employer, but investments and administrative expenses would not be segregated.

IF you have a plan where employer A contributions are available only for benefits to A's employees, you probably have a bunch of single employer plans paying into a single trust. In that case, if all funds are maintained in segregated accounts, the audit you describe could be done.