The DOL & You

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
• COBRA
• HIPPA

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