DOL Enforcement Efforts Are Wide-Ranging

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) released its program results for Fiscal Year 2019, which show its enforcement and Benefit Advisor programs recovered more than $2.5 billion in payments to benefit plans, participants and beneficiaries.

In FY 2019, EBSA closed 1,146 civil investigations, with 770 of those cases (67%) resulting in monetary results for plans or other corrective action. Recoveries on behalf of terminated, vested participants played a large role in these results. Under its Terminated Vested Participant Project, EBSA helped participants collect nearly $1.5 billion in retirement benefits owed to them in the form of lump-sum payments, present value of lifetime annuity payments and interest.

At the 2019 PLANSPONSOR National Conference, James Robison, managing director, Strategic Retirement Partners, said one of the most common steps that leads to a Department of Labor (DOL) audit is an employee complaint. In its program results, the EBSA said in FY 2019, EBSA’s Benefits Advisors closed more than 166,000 inquiries and recovered $510 million in benefits on behalf of workers and their families through informal resolution of individual complaints.

According to Robison, misunderstandings about how the plan operates could lead to complaints, and “regularly scheduled participant education can help dissipate that.”

Robison and Jania Stout, practice leader, co-founder, Fiduciary Plan Advisors, also noted that information on the Form 5500 could raise a red flag for the DOL. To avoid this, plan sponsors should “review the completed form against the plan’s trust report, employer census information, plan document and other plan information,” Mark Klein, CEO of PCS, a recordkeeper in Philadelphia, previously told PLANSPONSOR.

Michael Savage, retirement services compliance manager for Paychex in Rochester, New York, said errors that are typically found on Form 5500 “include participant counts, beginning asset balance, employer tax ID numbers, financial reconciliations with prior plan years and missing service providers on Schedule C.”

But, the EBSA is not just looking for errors and bad actors; it wants plan sponsors to be able to comply with laws and regulations and easily correct any mistakes. According to its program results, EBSA conducted 325 compliance assistance outreach events across the country.

It also continued to reach out to plan fiduciaries and others to participate in the Voluntary Fiduciary Correction Program (VFCP), and Delinquent Filer Voluntary Compliance Program to encourage the correction of Employee Retirement Income Security Act (ERISA) violations. These programs provide incentives for fiduciaries and others to self-correct by reducing or eliminating potential penalties and/or avoiding other adverse consequences. In FY 2019, EBSA received more than 20,000 delinquent filings and 1,600 applications for the VFCP. VFCP corrections totaled $14.6 million during FY 2019.