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The DOL & You

Has the DOL called?

What is the Department of Labor Looking For?

EBSA (Employee Benefit Security Administration) enforces ERISA Title I

They are concerned with:

  • Fiduciary Rules
  • Reporting and Disclosures

What plans are covered?

Qualified and non-qualified pension and retirement plans.

Welfare plans such as:

  • Medical
  • Dental
  • Vision
  • Cafeteria/125 Plans
  • LTD
  • Death benefits
  • Severance pay

What plans are excluded?

  • Governmental Plans
  • Church Plans
  • Workers Compensation Plans

What will EBSA target?

  • Plans with heavy concentrations of hard to value assets
  • ESOPs and stock bonus plans
  • Plans with high employee contribution recievables at year end
  • Plans receiving adverse/disqualification/disclaimer reports

What are the enforcement topics and common violations?

  • Corporate fraud
  • Mutual fund abuses
  • Employee contributions
  • Orphan plans and REACT
  • Allocation of plan expenses in a Defined Benefit Plan
  • Demutualization proceeds
  • Real estate investments
  • ESOPs
  • Other prohibited transactions
  • Excessive Fees

What criteria does EBSA use in selecting plans for examination?

  • Compilations of plans or service providers derived from reports filed with DOL
  • Form 5500 – standard and custom targeting runs
  • Referrals from IRS, SEC, state agencies, fiduciaries and service providers
  • Information derived from:

    • newspapers, industry journals, magazines annual reports, financial statements and other Pension and Welfare Benefits Administration sources

    Information received:

    • From plans targeted by subpoenas to TPAs or other financial institutions
    • As a result of complaints from fiduciaries participants, attorneys, accountants and TPAs

What do the investigators examine?

  • Fiduciary performance

    • How risks and merits were evaluated
    • Understanding of the investment by those with authority to make decisions
    • Diversification of assets
    • Selection of service providers
    • – how were they selected
    • Monitoring of service providers
    • Enforcement of investment policies
    • Review of fees being charged
    • Documentation of all decisions
  • Compliance with reporting and disclosure obligations

  • Compliance with bonding requirements

  • Trustee and plan administrator minutes

  • Investment policies

  • Use of professional advisors

EBSA is more concerned with the process fiduciaries use in arriving at their decisions than they are with financial performance of the assets.

  • Voluntary Compliance Initiatives

    • Delinquent Filer Voluntary Compliance Program – (DFVC) – plan administrators
    • Voluntary Fiduciary Correction Program (VFCP) for anyone who may be liable for fiduciary
      violations under ERISA