Products February 27, 2006

Tool Helps Sponsors Choose Plan Auditor

February 27, 2006 (PLANSPONSOR.com) - The American

 

Institute of Certified Public Accountants' (AICPA) Employee

 

Benefit Plan Audit Quality Center (EBPAQC) has released a

 

tool to help plan sponsors select the most qualified employee

 

benefit plan auditor.

Reported by

In its announcement, EBPAQC said the tool is part of the on-going effort to raise awareness of the importance of audits performed on the financial statements of employee benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA), including pension, health and welfare, and 401(k) plans.

The tool, “Obtaining Quality Employee Benefit Plan Audit Services:   The Request for Proposal and Auditor Evaluation Process,” describes the contents of the Request for Proposal (RFP) and contains a checklist of items that should be considered in preparing an RFP.   It also discusses the proposal evaluation and auditor selection process, and provides information about how to find an auditor.

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“A well performed audit helps plan sponsors fulfill their fiduciary requirements and produces better information to manage the plan and protect plan participants.   Those hiring the plan auditor are responsible for carefully assessing the qualifications of the audit firm before the hiring decision is made,” Ian MacKay, Director of the EBPAQC, said in the announcement.

Compliance February 24, 2006

Spouse not Informed of Effect of Beneficiary Waiver

February 24, 2006 (PLANSPONSOR.com) - The US District Court for the Northern District of California has ruled that a deceased participant's beneficiary designation form was invalid, even though his spouse had signed consent to name his children as beneficiaries.
Reported by

EBIA reports that, because the form did not include any acknowledgement by the spouse of the effect of the election to consent to a non-spouse beneficiary as required by the Employee Retirement Income Security Act (ERISA), the designation of his children as beneficiaries was invalid.  

The form merely stated that if the participant was married and wished to designate someone other than the participant’s spouse, the spouse must sign the form.   It gave no explanation of the right the spouse was giving up, though that was a requirement by the plan, according to the EBIA report.

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In addition the court ruled that the signature was not witnessed by a notary or a plan representative, also required by the plan (and ERISA), and the form was “likely” invalid for that reason as well.

The case is Sun Microsystems, Inc. v. Lema, No. C 04-04968 JF (N.D. Cal. Feb. 2, 2006).

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