What the DOL Looks for During an Audit

What the DOL Looks for During an Audit

By Wiss (483 words)
Posted in Employee Benefit Plan Audits on January 24, 2017

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By Craig Erickson 

You’ve just learned that the Department of Labor’s Employee Benefit Security Administration has selected your company’s retirement plan for an investigation. Are you and your plan prepared for an audit?

The DOL typically doesn’t provide much notice before beginning an audit, which can last several days, weeks or longer. However, in advance of starting, you will receive an investigation notice that includes a list of documents its people will want to review when they arrive at your offices.

The DOL document request

The DOL’s document request covers numerous agreements, forms, reports, disclosures and other documents, and it can feel overwhelming to have to collect them all at the last minute if you’re not prepared ahead of time.

The list begins with the signed basic plan document, including all amendments, and includes the summary plan description, annual Form 5500s, summary annual reports, most recent IRS determination letter, plan committee meeting minutes, employee enrollment packets, benefit statements and a slew of other documents related to the plan, its fees, investments, policies, distributions and fiduciaries.

If your first response to the DOL is, “I don’t know where this information is; I’ll need more time to find these documents,” your audit may be doomed before it begins. The DOL expects you to have this important documentation easily accessible. Not having immediate access could be an indication that your plan is not being prudently managed. 

Getting it together

Make sure you are prepared for a DOL audit by keeping all of your plan documents in order, long before the DOL contacts you about an investigation. We recommend that companies organize everything into a fiduciary binder, which is often a virtual binder on the company’s network containing the key files.

Having all of this information at your fingertips can save you valuable time and headaches later if the DOL does come knocking. The more prepared you are and the more organized your plan documents are, the less suspicious your DOL investigator will be. You want to illustrate that your plan administrators are prudently following a formalized, documented process — not scrambling to collect paperwork at the last minute.

And this initial document list is only the beginning of your audit. The DOL may request additional documents as it begins to scrutinize your plan looking for issues and errors. Even if the DOL never selects your plan for an audit, it’s much better to be proactive and prepared. Failing to be prepared, and waiting until notification of an audit to begin gathering documents, could result in hours of stressful time spent locating documents, fines and penalties to your business.

View a sample list of requested documents.

Craig Erickson is the Partner-in-Charge of our Employee Benefit Plan Group where he handles audits of defined contribution plans, defined benefit plans, health and welfare plans and ESOPs. If you would like to speak with Craig, you may reach him at 973.994.9400 or at cerickson@wiss.com.

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