By: David I Gensler, MSPA, MAAA, EA

Governmental oversight and compliance of retirement plans has largely shifted away from the IRS over to the Department of Labor (the DOL). At the American Society Of Pension Professionals and Actuaries (ASPPA) national conference in Washington, two speakers, J.K. Nowiejski and Heather Agribo made it abundantly clear that the DOL means business. They cited some daunting statistics. In 2016, the DOL’s Employee Benefit Security Administration (EBSA – remember, the government loves acronyms) engaged in the following enforcement activities:

  • They provided oversight to 681,000 retirement plans
  • more than $777 million was recovered for direct payments to plans, participants and beneficiaries
  • more than 2,000 civil cases were closed
  • 333 criminal investigations were closed
  • 62 federal lawsuits were filed
  • there were 96

One particular area of focus is plan sponsors and plan trustees. The DOL has found that despite all of the recent news surrounding who is a fiduciary of a retirement plan and what they are responsible for, many plan sponsors simply do not understand that they have a fiduciary obligation to the retirement plan and the plan participants.

Unlike an IRS audit, DOL investigations (that is the word that the DOL uses – “investigations”) are never random. While they will not share it with you or with your professional advisors, the DOL always has a reason to begin an investigation. Sources that can trigger a DOL investigation are complaints from employees or participants, enforcement projects, referrals or reviews of Forms 5500. They can also result from information gathered from other sources – including social media and newspapers, which can contain notices of bankruptcy. Other DOL investigative triggers are fees that look too high and cannot be explained or hard to value assets.

Once the DOL does begin an investigation, you need to know that they are deadly serious. There will be an interview with the plan sponsor and perhaps other employees involved in the day-to-day administration of the plan. How you respond in the interview will go a long way in determining if the DOL digs in for a serious investigation. The DOL has even gleaned information from conversations conducted in the employer’s break room.

Some things to keep in mind if the DOL does show up: it may be useful to tell your employees that DOL investigators are onsite and to please keep that in mind. Also, for goodness sake, as soon as you receive a notice from the DOL that they are considering an investigation, reach out to the plan’s TPA or to your ERISA attorney and make sure that you are professionally represented. The DOL has extensive powers and they are not afraid to use them. Take their investigation as seriously as they do.

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