GAIN CONTROL berrydunn.com

GAIN CLARITY DOL OR IRS AUDIT: WHAT ARE THE AUDIT AREAS?

Presented by: Bill Enck, CPA, CPC, APA Roger Prince, JD, APA

DOL AUDITS: WHAT TO EXPECT?

Different types 1. Audits (aka Investigations)

2. “Request for Clarification”

• Related to Form 5500 filings

• 15 days to respond

• Not an “audit” (but could lead to one)

2

HOW IS A PLAN SELECTED FOR A DOL INVESTIGATION?

• Participant complaints

• Other government agencies

• Service provider complaints

• Forms 5500

• Media

3

EMPLOYEE CONTRIBUTION DEPOSITS AND PARTICIPANT LOAN PAYMENTS?

• How quickly should these be deposited after the pay date?

• Does rule apply to deposits or date invested?

• How to correct an error?

Voluntary Fiduciary Correction (VFC) Program

4

POTENTIAL AREAS OF INVESTIGATION?

Bonding, reporting and disclosure • A Fidelity/ERISA Bond for the plan?

• Past due Forms 5500 (e.g., welfare benefits plans)?

Delinquent Filer Voluntary Correction (DFVC) Program

• What documents must be disclosed? • Annually? • Periodically?

5

FIDUCIARY RESPONSIBILITIES • Service provider fee disclosure

• Participant fee disclosure

• Plan investments DOCUMENT, DOCUMENT, DOCUMENT!!!!

6

OTHER POTENTIAL INVESTIGATION AREAS

• Quality of benefit plan auditor

• Employer securities

• Prohibited transactions

7

WHAT HAPPENS IF ERRORS ARE FOUND DURING THE AUDIT?

• Civil litigation

• Civil penalties

• Criminal prosecution

8

DIFFERENT TYPES OF IRS AUDITS

• Full scope examination • Focused examination – Most Common • Office/correspondence examination (OCEP)

9

HOW IS A PLAN SELECTED FOR AN IRS AUDIT?

• Form 5500 (risk based targeting)

• “LESE” – Learn, Educate, Self-Correct, and Enforce

• Emerging Issues Team

• Other government agencies

• Randomly

10

COMMON AUDIT AREAS AND/OR DOCUMENT REQUESTS

Specific to not-for-profit 403(b) plans

• Universal availability

• Hours worked (e.g., adjunct professors)

• Catch-up contributions

11

PLAN DOCUMENTS

• Do you have signed plan documents and/or amendments?

• Do you have all required plan amendments

• Final 415 regulations • PPA good faith • Non-spouse beneficiary rollover • HEART • 401(a)(35) • WRERA • In-Plan Roth Conversions

12

PLAN PARTICIPANT NOTICES

• Safe Harbor 401(k) Plan

• Automatic Enrollment

• Dual eligibility: notice when employees is eligible for employer

match

• Document why employees are not participating?

13

OTHER AUDIT AREAS

• Controlled group/affiliated service group

• Required compliance testing

• Compensation reconciliation

• Distributions

14

WHAT HAPPENS IF ERRORS ARE FOUND DURING THE AUDIT?

• Plan must be made whole!

• Self-correction

• Audit CAP

15

WE ARE ALWAYS AVAILABLE FOR YOUR QUESTIONS

Roger Prince rprince@berrydunn.com

Bill Enck benck@berrydunn.com

16