Is Your Employee Benefit Plan Being Audited By The Department of Labor (DOL)?

Take a deep breath and calm down! There are several common mistakes employers make that could generate an audit of their employee benefit plan. In some cases it could be just random due to the industry, geography, or plan type.  Nevertheless, let’s discuss who is auditing you, the process of the audit, what the documentation they can request and what they are targeting.

WHO is Auditing your Employee Benefit Plan?

You can give the special thanks to the Employee Benefits Security Administration (EBSA), which is part of the Department of Labor (DOL). The Employee Benefits Security Administration enforces the Employee Retirement Income Security Act, otherwise known as ERISA. They ensure the integrity of not just retirement plans, but welfare benefit plans too, such as the companies providing life or disability insurance.

HOW is the Audit Going to be Conducted?

On your notice you could see a lengthy list of documents they want to review as well as a response deadline, usually ten days from the receipt of the letter. In addition, it’ll state when the audit is to take place and who the audit examiner is. If you need more time to adhere to their request then simply ask. Communication is key for a smooth audit with the examiner. Make sure you give adequate time for the request and majority of the time they are pretty reasonable.

Simply ignoring the letters will just stack up the fees. You must grab the bull by the horns and tackle the situation head on. You must remember the Department of Labor has the authority to seek both civil and criminal penalties. Let’s say you decide to ignore the notices. Well, you could see penalties of $110 per day up to $1,100 per request.

Overview of an Employee Benefit Plan Audit Process

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Document Request Letter

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Production of Documents

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On-site Interviews

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Voluntary Compliance, Violation Letter or No Action

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Closing Letter

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Settlement Agreement

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Criminal Investigation or Civil Litigation Referral


You should expect the examiner to interview the employer and other plan fiduciaries. For example, the Plans’ Administrator, Attorney and Accountant should be prepared to answer any questions regarding the plan and its operations.

Department of Labor Common Documentation Requests

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  • Plan Documents and Trust Agreements, including all amendments
  • Summary Plan Description
  • Summary of Material Modification Reports
  • Investment Policy Statement
  • Most recent IRS Determination Letter
  • Signed IRS Form 5500 with All Attachments
  • Summary Annual Report
  • All Plan Notices, Communications and Trustee/Corporate Meeting Minutes
  • Distribution Records
  • Individual Benefit Statements
  • Service Provider Contracts
  • Discrimination Testing Results
  • Beneficiary Designation Forms


Prior to the on-site audit, you should do a pre-audit with one of our experienced and dedicated employee benefit plan specialists and your provider. Make sure you have all pertinent documents, supporting evidence along with an organized plan. In doing so, you are able to identify mistakes and make any corrective actions. Correcting the mistakes earlier could minimize any penalties potentially assessed. Employee Benefit Plans are complicated and errors can happen, despite best efforts. Having a thorough internal review process and annual audit will help ensure your plans are in compliance.

WHAT is the Examiner Targeting?

The examiner is going to analyze and perform test on the information provided in order to determine some of the following:

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  • Timeliness of Required Deposits
  • Payment of Plan-Related Expenses
  • Investment Policy Statement
  • Accuracy of Form 5500
  • Reporting and Disclosure
  • Funding Policy
  • Prohibited Transactions


I cannot express enough how many times I have seen individuals not fully prepared or have provided additional information than initially requested, thus resulting in an unfavorable outcome. With the Affordable Care Act along with the Consolidate Omnibus Reconciliation Act (COBRA) and the Health Insurance Portability and Accountability (HIPPA) there has been an increase in group health plan audits on top of retirement plan audits. Make sure you are PREPARED. If you feel you’re not able to fully ensure compliance, then contact us to have one of our experienced employee benefit plan specialists help you navigate the complexities of these plans.

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