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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.