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Are You An Easy Target for a 401(k) Plan DOL Audit?

Did you know that more than 70% of manufacturers are failing their 401(k) plan audits and paying large fines and penalties? Start the year off right and don’t be an easy target for a 401(k) plan U.S. Department of Labor (DOL) audit.

With the recent increase in oversight of retirement plans by both the DOL and the Internal Revenue Service (IRS), it is extremely important to remain diligent in carrying out your fiduciary responsibilities as a plan sponsor. A recent report of U.S. Department of Labor (DOL) audit results stated that almost 3 out of 4 audits found violations of the Employee Retirement Income Security Act of 1974 (ERISA). The average cost for a plan sponsor to correct them, including fines and penalties, is approximately $450,000. The DOL’s ERISA audit force will continue to expand and increase audit activity to include over 1,000 investigators. This unfortunately makes you an easy target for the DOL who considers your potentially inadequate 401(k) governance protocols  as low hanging fruit.

It is therefore imperative that Defined Contribution Plan Sponsors do not take a hands-off approach towards plan management, as most cannot afford to do so. The plans’ fiduciaries (typically, either the company itself or a designated committee) must ensure they are doing everything they can to act exclusively in the best interest of the plans’ participants.

The good news is that the NJMEP has partners and affiliates to help you stay in control. We have the resources to connect you with a trusted 401(k) consultant who can help you adopt an on-going due diligence process that starts by conducting a fiduciary and operational assessment of your 401(k) plan to determine and document its current state.

This Qualified Governance Assessment (QGA) due diligence process includes:

  • Plan Governance and Compliance Assessment
  • Plan Investment Assessment
  • Plan Fees and Cost Assessment
  • Plan Communications Assessment

The QGA is a great way to obtain an independent outside review of your plans’ governance, investments, plan fees, and communication procedures. The assessment is ultimately a WIN-WIN as it will either help you to identify areas where tighter controls and plan enhancements can be made, or confirm and document in your plans’ fiduciary files that current procedures are in line with industry and regulatory standards.

Click here for your complimentary Qualified Governance Assessment Guide from Wealth Enhancement.

Brian Gregov, AIF®, QKA

Vice President, Retirement Plan Solutions
Brian Gregov

Brian oversees all aspects of retirement plan administration, operations, plan design, governance, consulting, and investment fiduciary services and leads a team of highly credentialed professionals.

Brian supports the ongoing plan governance and fiduciary responsibilities for his clients’ 401(k) plans to ensure they fulfill their fiduciary requirements. He ensures that clients are in compliance with all relevant laws and regulations, and coordinates and conducts employee education presentations to help plan participants effectively save for retirement.

Brian holds the Accredited Investment Fiduciary® (AIF®) designation and the Qualified 401(k) Administrator (QKA) designation. He earned a bachelor’s degree in business management from The Richard Stockton College of New Jersey.

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