Header graphic for print
Pensions & Benefits Law A Discussion of Canadian and U.S./Cross-Border Pension & Benefit Legal Issues

Are You Ready for a DOL Audit? 401(k) and Pensions Plans are in the Crosshairs

Posted in U.S. Pensions & Benefits Law

A recent report of U.S. Department of Labor (DOL) audit results contained some surprising statistics: almost 3 out of 4 audits find violations of the Employee Retirement Income Security Act of 1974 (ERISA) and the average cost for a plan to correct them, including fines and penalties, is $450,000. The DOL’s ERISA audit force will expand to include over 1000 investigators and audit activity will be increasing.

Plan administrators often prepare for IRS audits by doing their own plan compliance audits to identify problems to correct. However, we hear less frequently about clients preparing for a possible DOL audit, even though these audits are becoming more common. DOL audits could be triggered by answers on Form 5500 or employee complaints, or be the result of random selection.

Here are some questions to answer when you consider how prepared you really are to survive a plan audit:

  • Is your Summary Plan Description updated to reflect current plan provisions?
  • If your pension plan is an unfunded plan for executives, have you filed a "top hat" notice with the DOL? If not, you could be liable for failing to file Form 5500.
  • Have you filed Form 5500 on time (taking extensions into account) and, if your plan covers at least 100 participants, did you attach a complete independent accountant’s audit?
  • Do you have procedures for reviewing plan investments?
  • Do you know if the fees paid to service providers are reasonable, and have you received required fee disclosures from your providers by July 1, 2012 (the initial compliance deadline)?
  • Have you distributed benefit statements to participants?
  • Has your plan been involved in prohibited transactions?
  • Are you timely depositing employee contributions?

This is just a beginning of the review you will need to make. However, if you find a problem before the DOL does, there are two programs that will enable you to fix them with less severe penalties: a delinquent filer voluntary compliance program for 5500’s and a voluntary fiduciary correction program for fiduciary breaches. These are similar to the popular IRS voluntary correction program and make it potentially costly for plans to fail to do ERISA self audits.

  • Would you happen to have a link or URL for a copy of the DoL audit report? I linked to you blog, however some folks would like to review the original report for themselves.


  • Carol Buckmann

    The audit results were actually released in February 2012 in an EBSA Fact Sheet headed: EBSA Achieves $1.38 Billion in Total Monetary Results in Fiscal year 2011. Here is the link: http://www.dol.gov/ebsa/newsroom/fsFYagencyresults.html