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DOL Audits: What Triggers Them and Time Spent

DOL audits are never fun but they are made worse when a new administrator of the company’s 401k plan just takes over and has to put together information maintained by their predecessor. What triggered the audit of a 230 person organization attending a TPSU program in Maryland and how much time did it take?

Though not exactly sure why the organization was targeted by the DOL, the Director of Finance suspects that inconsistent contributions to the retirement plan was the main cause. In addition, the company did not follow recommendations made by their internal auditor.

Though at the tail end, the process took several months with a lot of time spent tracking down documents from 2010. The new Director had just taken over so answering questions and finding documents took longer than normal.

At a TPSU program conducted at the University of Pennsylvania, CPA and ERISA audit specialist Maria Hurd outlines some red flags on timing of contributions which is one of the biggest issues found by DOL auditors.

Contributions to employee defined contribution (DC) plans must be made as soon as reasonably possible. Issues occur when companies sponsoring a DC plan creates deviates from the pattern of when they make contributions.

There are acceptable exceptions which do not need to be reported to stay out of trouble including a record keeper change, emergency absence by a key employee or some other explainable event. Otherwise, the assumption might be that the company is using the contributions as an authorized loan which is a prohibited transaction.

One way to save time during a DOL audit is to make sure that the plan’s advisor has all information and copies of documents that might be needed so that even if there is a transition, the time spent is minimized. Though improving outcomes and help with fiduciary liability are important services provided by an advisor, according to the 2017 TPSU/NAPA Survey, help with compliance was noted as the second most important service just behind investment selection and monitoring. Is your advisor helping with compliance issues and maintaining documents?

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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