Benefits Blog

DOL Audits and Criminal Investigations are Increasing

Posted by Nathan Carlson on Wednesday, September 04, 2013 @ 03:20 PM

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describe the imageWhen ERISA was passed in 1974, Congress realized that the provisions of ERISA would have to
be enforced.  So, Congress also created the Employee Benefits Security Administration (EBSA), which is responsible for ensuring the compliance and integrity of the private employee benefit system in the United States.  EBSA is a division of the Department of Labor.

EBSA’s job is immense and the numbers are staggering:

  • EBSA oversees 707,000 retirement plans and 2.3 million health plans

  • These plans cover 141 million workers and over $7 trillion in assets

EBSA was very busy in 2012.  Through over 3,500 EBSA audits and investigations of employee benefit plans, it recovered $189 million in plan assets.  EBSA was also involved in 318 criminal investigations that led to the indictment of 117 individuals--including plan officials, corporate officers, and service providers – for offenses related to employee benefit plans.


Recently, EBSA brought charges against a former 401(k) Trustee, Matthew Hutcheson for 17 counts of felony wire fraud involving three different ERISA retirement accounts that he oversaw.  Matthew was convicted on all 17 counts, ordered to pay $5.3 million in restitution, and sentenced to 17½ years in jail.


How does the Department of Labor and EBSA identify retirement plans for possible audit?  The DOL routinely reviews Form 5500s that are filed on an annual basis by all retirement plans.  For example, if the 5500 is reporting the existence of late contributions, no fidelity bond, or a high concentration in illiquid assets, the plan has a high probability of audit.


However, the greatest source of leads for DOL/EBSA audits comes from none other than the plan’s disgruntled participants.  In 2012, the DOL received over 230,000 phone calls from these participants—calls that resulted in 815 plan audits.


If you are one of the “lucky” ones that have been selected for an IRS or DOL audit, you may want to download a copy of my most recent White Paper, “How to Prepare for an IRS or DOL Qualified Plan Audit”.  This resource will help you to understand the different emphases of an IRS vs. a DOL audit; gives you a checklist of the various documents the auditor may request; and, should you seek out professional assistance, the types of professionals and the corresponding ERISA credentials to look for.


Download the Full PDF Report

Topics: Pension, ERISA, 401(k), DOL, EBSA, Audit

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