Through the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA), DOL investigations are on the rise, conducting thousands of audits per year and the DOL is planning on hiring more enforcement officers. The EBSA’s oversight authority extends to not only retirement plans but also to other welfare benefit plans, such as those providing life or disability insurance. They are responsible for ensuring the integrity of the private employee benefit plan system in the United States.
In FY 2013, the EBSA closed 3,677 civil investigations with 2,677 (72.8%) resulting in monetary results for plans or other corrective action, exhibiting its ability to effectively target ERISA violators in the employee benefit plan universe and closed 320 criminal investigations. EBSA’s criminal investigations, as well as its participation in criminal investigations with other law enforcement agencies, led to the indictment of 88 individuals – including plan officials, corporate officers, and service providers – for offenses related to employee benefit plans. More statistical information on EBSA investigations can be found on the DOL’s website. Fact Sheet.
With nearly three out of every four plans audited by the DOL having Employee Retirement Income Security Act of 1974 (ERISA) violations, industry professionals speculate they are preparing for another increase in benefit plan audits for both Retirement Plans and Health & Welfare Plans.
You Received an Audit Notice…Now What?
Simply put, don’t ignore it!!! As previously mentioned, the DOL has the authority to seek both civil and criminal penalties and ignoring them is not going to make them go away. Failure to provide requested plan documents can result in a penalty of up to $110 per day up to $1,100 per request.
The notices generally include a lengthy list of documents it wants to review as well as a required response date, usually ten days from the receipt of the letter. It will also indicate when the audit is scheduled as well as the contact information for the examiner. If you have a scheduling conflict or need more time to gather all of the information requested, don’t hesitate to ask for more time. The auditors are generally pretty reasonable and if given ample time are willing to reschedule.