The old adage “the best defense is a good offense” has been attributed to many including Jack Dempsey, the world heavy weight prize fighter. The adage can be applied to employee benefits. Instead of being on the defensive when the audit letter arrives, be proactive and prepare for it by conducting a compliance review.
The DOL is increasing its investigative staff. Retirement plans are not the only plans being audited. Health & Welfare plans are increasingly being audited. And it’s not your usual suspects being audited. Many health & welfare audits are the result of an ongoing 401(k) audit.
The documents required for an audit can be enormous. Gathering the documents is time consuming. The length of your engagement with either the DOL or IRS can be lengthened by providing incomplete or wrong information.
A compliance review simulates an IRS or DOL audit. The compliance review is based on data typically requested by the government when conducting a review. Employers preparing for an audit, as well as employers who have recently acquired another plan, welcome this type of review.
