Plan sponsors and other fiduciaries have an obligation to protect participants in their benefit plans.
Plan sponsors should consider their procedures and documentation related to fulfilling their fiduciary responsibilities. Visit the DOL’s EBSA website for more guidance, tools, and information. Below are some of the fiduciary duties that have been areas of emphasis for the EBSA in their reviews of plan sponsors.
Plan fiduciaries are responsible for locating and distributing retirement benefits to missing or non-responsive participants. The EBSA has published “Missing Participants — Best Practices for Pension Plans,” providing examples of best processes and practices, including:
- Maintaining accurate census data
- Using an effective communication strategy
- Actively searching for missing participants
- Documenting procedures and actions
Plan fiduciaries are responsible for acting solely in the interest of plan participants and beneficiaries, and for their benefit. This obligation includes assessing investment and plan administrative fees and expenses charged to plan participants. Plan service providers should also be evaluated and benchmarked against similar service providers. Although cost is an important consideration, it is not the only criteria used in selecting a provider.
Delinquent Participant Contributions
DOL regulations require the transmission of participant contributions to the trustee or custodian of the plan as soon as the monies can be segregated from company assets. This can be done the same day the funds are withheld from the participant’s paycheck in many instances. Failure to submit participant contributions promptly may result in a prohibited transaction. This could require corrections to be made, including calculating each participant’s lost earnings and depositing that amount to the affected participant’s account. If a correction is made and certain other conditions are met, the plan sponsor may also apply for a “no action” letter from the EBSA and IRS excise tax relief file under the Voluntary Fiduciary Correction Program.
BPM Employee Benefit Plan Audits
At BPM, we are committed to achieving the highest quality and most efficient audits possible with our specialized team of auditors. We have over 30 years of experience in performing employee benefit plan audits, and helping plan sponsors comply with complex, ever-changing rules and regulations. We perform audits on the following types of employee benefits plans: defined contribution, defined benefit, 403b, 401k, cash balance and employee stock ownership plans (ESOP). Contact our team today to learn how we can help drive trust and transparency for your plan.