Employee Benefit Plan Matters: Department of Labor’s Focus Areas

by: Smith and Howard

January 17, 2014

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With ever-changing regulations, laws and industry standards, running a compliant employee benefit plan can be a challenge.  Add to that, the Department of Labor’s 450+ field investigators whose duty is to review qualified plan issues and plan sponsors can struggle to remain truly “Qualified.”

At our September 2013 seminar on Employee Benefit Plans, we discussed a few consistent problems (and their solutions) that we see when reviewing qualified plans. Below we will discuss these, as well as others the DOL has begun to focus on.

Problem: Late Deposits

This is still very much a hot topic – and criminal initiative – with the DOL. 401(k) deferral and participant loan repayments must be made “as of the earliest date on which such contributions can be reasonably segregated from the employer’s general assets.” The maximum time period for pension benefit plans shall be no later than the 15th business day of the month following the month in which the participant contribution amounts are received by the employer. 

Solution: Set an appropriate policy for deposits and follow it. Reconcile loans and contributions each payroll period.

Problem: Definition of Compensation

This may involve wages being coded in a way that does not match the plan’s provisions; issues with coding when record keepers or payroll services are converted or upgraded.

Solution: Understand the definitions of compensation which are critical for accurately calculating participation deferrals, employer contributions, ADP and ACP tests. Understand each type of contribution and know which compensation elements are included and excluded for various plan purposes.

Problem: Failure to Follow the Plan’s Investment Policy and Related Fiduciary Responsibilities

Solution: Understand the role of a fiduciary and when that person is either acting in a fiduciary or employer role. Hold regular plan fiduciary/committee meetings, keep and record minutes and read and follow plan documents. As Ed Emerson of Morris Manning Martin said in our seminar, “Don’t guess. Plan fiduciaries should have a copy of the plan document, trust agreement, investment policy statement, committee bylaws or charter and summary plan description.” What’s more, these documents must be read, compared for consistency and put into actual practice.

For additional information on current DOL focus areas, and for advice or guidance on addressing potential problems, please contact Smith and Howard’s Employee Benefit Plan Audit team at 404-874-6244.


How can we help?

If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.