During the coronavirus pandemic (“COVID-19”) that has consumed the majority of our 2020 year, businesses are struggling to simply survive, are required to deal with social distancing restrictions, and often are working with limited resources due to employees working on a limited and/or remote basis. One would assume that during these unprecedented times, you’re pretty safe from being notified by the Department of Labor (“DOL”) that your employee benefit plan has been selected for review.  However, this is not the case.

I received notification a couple of weeks ago that a local company received a letter from the U.S. Department of Labor’s Employee Benefits Security Administration, notifying the company that its employee benefit plan was selected for review. This alone can be challenging during “normal” circumstances.  However, during the COVID-19 pandemic, this can prove to be even more challenging. And did I mention the DOL allotted a thirty-day turnaround for the requested documents to be provided?

So to prevent panic and chaos if this occurs with your employee benefit plan, take notice of the items requested below. If you have idle employees, have them start compiling the documents listed below or note where the records are housed. These documents serve as evidence that your plan complies with Title 1 of the Employee Retirement Income Security Act. And as always, there is the disclaimer that this may not be an “all-inclusive” listing. If your plan is selected for review or audit, the requested items could vary based on the type of plan in operation.

Documents and Information

1. Signed Plan documents in effect during the examination period including governing documents, trust agreements, insurance policies, and amendments

2. Signed Annual Report Form 5500’s and audited financial statements

3. Annual Funding Notices (Note: this is typically applicable for Defined Benefit Plans, not Defined Contribution Plans)

4. Summary Plan Description and Summary of Material Modifications

5. Summary of Annual Reports

6. Annual notices to participants that describe any administrative fees or service charges that will be withheld from contributions to the Plan or deducted from participant’s accounts

7. Sample of Individual Benefit Statement

8. Latest fidelity bond (including all riders, endorsements, coverage provisions, and definitions) for the Plan(s) covering fraud and dishonesty revealing all ERISA requirements:

• the named insured
• the length of discovery period
• the bond lapse date
• that there is no deductible
• the amount of the bond

9. Latest IRS Determination Letter or signed IRS Request for Determination

10. Copy of the latest Fiduciary Liability policy

11. All Contracts and agreements with service providers to the Plan

12. The Plan’s investment policy

13. Minutes to Board of Directors, Plan Committees, and Trustees meetings regarding Plan matters

14. Documents relating to Plan mergers and separations, if applicable

15. Collective bargaining agreements and participation agreements, if applicable

16. Schedule of Plan Assets, including:

• All documentation of any loans to or from the Plan, mortgages, leases, and deeds relating to plan investments
• All documents identifying other assets, other income, and other expenses

17. All documentation pertaining to the Plan’s investments in any non-publicly traded securities, employer securities, limited partnerships, limited liability companies, joint ventures, hedge funds, or real properties, including:

• All documents pertaining to the acquisition, disposal, valuation, investment income, and investment gains/losses, including the Offering Memorandum and Prospectus
• All documents relating to quarterly fees, commissions, and expenses paid by the Plan, including investment management fees and brokerage commissions
• Evaluations (appraisals) of any non-publicly traded securities or real property
• Investment research and risk assessment analysis on any alternative investments

18. Detailed documentation of the Plan’s administrative and investment expenses for the period, including the accounting, actuarial, contact administrative, legal, trustee, and “other” as reported on Forms 5500. Documentation must be in sufficient detail to determine exactly what services or tasks were performed and for whom the services were performed if invoices reflect shared services by the Plan, other plans, the company, or any other party.  

19. All documents relating to arrangements between the Plan and persons or entities from which the Plan or employees of the Plan received money, goods, or services as a result of transactions involving Plan assets.

20. Correspondence and reports of any internal investigations performed for the Plan

21. Financial records, including:

• account ledgers for receipts and disbursements of plan assets
• trust reports
• bank account statements
• payroll records or summaries showing participant contributions withheld for deposit to the Plan deposit by payroll period
• allocation records

22. Actuarial reports and studies, including any consulting reports prepared in whole or in part by an actuary retained by or on behalf of the Plan

23. All Census data for the Plan, including all data provided to or used by the Plan’s actuary in connection with the preparation of the Plan’s actuarial report, any consulting agreements, or the Schedule SB to the Plan’s 5500

24. All documents considered or relied upon in answering questions on the Form 5500, Part II, 6(c) and (e)

25. All policies and procedures followed in preparing the responses to questions on Form 5500, Part II, 6(c), and (e)

26. All documents which identify the policies and procedures used to search for missing or deceased Plan participants

27. Listing or report of all terminated vested employees age 65 and older and deceased participants who are not in pay status or have not claimed benefits, including:

1. social security number
2. employee identification number
3. first and last name
4. birth date
5. last known address
6. participant status
7. date of termination or death (if applicable)
8. years of vesting service
9. accrued benefits

28. Sample notification letter provided to participants and terminated vested employees upon eligibility for benefit distributions

29. Any other documents which may explain or clarify the above items

If your company receives a letter from either the DOL or the IRS regarding any investigation, review, or audit, contact your CPA and keep them in the loop of what is going on. Often, we have insight on what should or should not be sent or shared. We can assist with drafting letter responses and simply be there to talk through matters. Whatever you do, respond timely. They are generally willing to work with you but are less likely to do so if responses are delinquent. As always, feel free to reach out to us for assistance as we are all in this together.