Regulators and Audits

Sample Document Request Letter

DOL 401(k) Plan Investigation Document Request List

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You can see in the letter above, you will have 10 business days to provide the requested documents.

Tips:

• Sending the documents to the investigator directly is less disruptive that an on-site investigation.
• If your cannot meet the deadline, contact the DOL agent and request an extension of time.
• Consider offering to produce some of the documents in advance of the initial deadline as a good faith gesture.
• Appoint an internal “point person” who is responsible for gathering all of the documents and information.
• Only produce what the DOL requests and be prepared for follow-up requests.
• Ensure that you get some type of delivery confirmation or return receipt.

§408(b)(2) Fee Disclosure Review Worksheet

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A practical worksheet to help retirement plan fiduciaries review service provider fee disclosures and document their oversight process.

Why §408(b)(2) Fee Reviews Matter

Under ERISA Section 408(b)(2), retirement plan service providers must disclose important information about their services, compensation, and potential conflicts of interest.

These disclosures are designed to help plan fiduciaries determine whether the fees paid by the plan are reasonable relative to the services provided.

Because retirement plan fiduciaries have a duty to monitor service providers and ensure fees remain reasonable, reviewing §408(b)(2) disclosures is an important part of maintaining a prudent fiduciary process.

Conducting and documenting these reviews helps plan committees demonstrate active oversight and thoughtful evaluation of plan expenses.

What This Worksheet Helps You Do

This §408(b)(2) Fee Disclosure Review Worksheet provides a structured checklist to assist retirement plan fiduciaries when reviewing service provider disclosures.

The worksheet helps committees evaluate:

• services provided to the retirement plan
• direct and indirect compensation paid to service providers
• revenue-sharing arrangements and other compensation sources
• potential conflicts of interest
• clarity and completeness of disclosure information
• documentation of fiduciary review and decision-making

The worksheet also provides a format for documenting the review process, which is an important component of demonstrating fiduciary diligence under ERISA.

Section 404(a)(5) Participant Fee Disclosure Review Worksheet

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A practical worksheet to help plan fiduciaries review and document participant fee disclosures.

Why Participant Fee Disclosure Reviews Matter

Under ERISA Section 404(a)(5), retirement plans that allow participants to direct their own investments must provide clear disclosures about plan fees, expenses, and investment information.

These disclosures help participants understand:

• the costs associated with participating in the plan
• the fees charged by service providers
• the expenses associated with each investment option

Plan fiduciaries are responsible for ensuring these disclosures are provided and that the information remains accurate, complete, and understandable.

Conducting a periodic review of participant fee disclosures is an important part of maintaining a prudent fiduciary process.

What This Worksheet Helps You Do

This Participant Fee Disclosure Review Worksheet provides a structured checklist to help plan fiduciaries evaluate whether required disclosures are being delivered properly.

The worksheet helps committees review:

• timing of participant fee disclosures
• completeness of required information
• accuracy of investment-related information
• explanation of administrative and individual fees
• accessibility of disclosure materials to participants
• documentation of the review process

The worksheet also helps retirement plan committees maintain written documentation of their oversight, which is an important part of demonstrating fiduciary diligence.

What you need to know

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The IRS wants your plan to stay qualified and has established a program to fix the most common errors they see. In fact they have three correction programs.

Self-Correction Program (SCP)

Many mistakes in operating your retirement plan can be self-corrected without filing a form with the IRS or paying a fee. Eligible operational failures include:

• failure to follow the terms of the plan
• excluding eligible participants
• not making contributions promised under the plan terms
• loan failures

Voluntary Correction Program (VCP)

A tax-favored retirement plan (401(k) or other qualified plan, 403(b), SEP or SIMPLE IRA) generally loses its tax-favored status if “failures” occur. Examples of failures are situations where the plan sponsor fails to take certain actions, which include:

• Maintaining a valid, up-to-date plan document.
• Following the terms of the plan document while operating the plan.
• Complying with federal tax law requirements while operating the plan.

VCP helps by allowing you to:

• Obtain a written agreement, called a compliance statement, showing that the IRS approved your proposed correction method.
• Bring your retirement plan back into compliance with federal tax law.
• Provide the benefits communicated to your employees in your written plan document.
• Protect your tax deductions.
• Ensure that participants’ retirement savings continue to accumulate tax-deferred.
• Avoid unfavorable tax consequences that would normally result from the disclosed failures (if you complete all corrective actions described in the compliance statement by the stated deadlines).
• Avoid paying the larger closing agreement sanctions that would apply if an IRS audit or determination letter application review discovers the failures.
• Request relief from certain federal income or excise taxes associated with certain plan errors.

 Audit Closing Agreement Program (Audit CAP)

A plan sponsor that does not come forward to the IRS, but whose retirement plan has significant problems that are discovered by the IRS on examination or during the determination letter application process, is entitled to correct significant mistakes under Audit CAP to preserve the tax benefits associated with properly maintained retirement plans.

Generally, under Audit CAP, the plan sponsor or the plan is under examination and the plan sponsor:

• Corrects significant mistakes in the plan
• Enters into a Closing Agreement with the IRS
• Pays a sanction negotiated with the IRS taxes associated with certain plan errors.

Preparing for Your Annual Employee Benefit Plan Audit

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Here is a guide from some experts in the business!