At a TPSU program held at Adelphi University, a former IRS investigator now working with ERISA plans like 401ks and 403bs explains what is triggering DOL audits this year.
Louis Librandi with the Long Island based accounting firm of O’Connor and Davies who has been auditing benefit plans for decades outlines the current priorities for DOL investigators.
Many audits start with a call by a plan participant but many others come from a review by the DOL of the 5500 forms. Librandi stated that 403b were under stricter scrutiny this year (perhaps in light of the rash of lawsuits against universities). Mutli employer plans and 457 plans are also being targeted.
The DOL is looking at how plans are treating part-timers as well as plans with excessive loans, leakage and hardship withdrawals. In addition, if there are inconsistencies in the 5500 where numbers do not add up, red flags are raised.
And though almost all plan sponsors rely on their TPA or record keeper to prepare the 5500, ultimately it is the responsibility of the plan to make sure the filing is accurate.
So what should plan sponsors do when they get a letter of inquiry from the DOL? One problem is timing. The letter may simply be addressed to “Plan Administrator” taking days or even weeks before it ends up in the right hands. That delay can be costly because there are normally deadlines within which to respond.
Then the plan sponsor has to decide whether they need professional help either from their TPA, CPA or even whether to hire outside counsel.
Attending his first TPSU program, Librandi was struck by the power of peer to peer learning. He could explain best practices to plan sponsor clients but he saw how it was more effective for them to learn from each other realizing the fundamental fact that adults trust peers more than experts.
