There are a lot of combos that bring a smile to your face when you hear them:
- Peanut butter & Chocolate
- Laverne & Shirley (or for the younger set… Beavis & Butt-Head)
- Joe Montana & Jerry Rice
- Bacon & … anything
- Audit & Department of Labor
I doubt that last one is on your list. Very few things bring about more fear and dread than being audited by a government agency.
The Employee Benefits Security Administration at the U.S. Department of Labor is tasked with the enforcement of ERISA, which includes audits of retirement plans. The objective of their audits is the protection of the interests of participants. Therefore an audit is centered around compliance with the Plan Document. The Plan Document (many times in combination with an Adoption Agreement) is the document that governs eligibility, contributions and benefits within a retirement plan.
In our retirement plan audit practice, we regularly find situations where the Plan has not been operated in compliance with the Plan Document. These operational errors range from small inadvertent errors to very large, very costly, inadvertent errors. Rarely are the errors intentional. And in the majority of cases, the errors stem from either a lack of understanding of the Plan provisions or lack of internal controls designed to prevent, or detect and correct, errors on a timely basis.
The following article, published online by Employee Benefit News, outlines 10 common mistakes that occur in retirement plans. It also highlights a few emerging issues in retirement plans. While the article indicates that mistakes could trigger an audit, that is generally not the case, as audits usually arise one of three ways: (1) random sampling (2) irregularities noted in a 5500 filing (3) complaint filed by a participant.
If you have any questions about the information in the article, please do not hesitate to contact your BeachFleischman client service professional, or contact me directly.