A Plan Audit By A Government Agency

Several government agencies provide oversight of Employee Benefit Plans.  These agencies include the Internal Revenue Service (IRS), the Department of Labor (DOL), and the Pension Benefit Guaranty Corporation (PBGC).  Protecting participant rights is the main focus of each agency.  In addition, each agency wants to ensure that participants understand their rights and receive the benefits they are entitled to under their respective plan.


A plan sponsor could find itself involved with a government audit as a result of, but not limited to the following:


  • Complaints by plan participants to the Employee Benefit Security Administration.
  • Random selection.
  • Inaccurate or late filings of the Form 5500.


If selected for an audit, the process generally will begin with the receipt of a data request letter that will include a response deadline; however an extension of the response deadline may be requested.  The data request can be extensive.  You will be asked to provide the basic plan governing documents, regardless of the type of plan (retirement or health and welfare).  These documents include:


  • Plan documents
  • Summary Plan Description (SPD)
  • Trust agreements

To determine that participants are informed of their rights under the plan the auditor may request proof that mandatory disclosures have been made.  The plan must be able to prove that the required notices were distributed.  A data request for retirement plans could ask for specific disclosures or “all documents relating to communications to the Plan, from the Plan, or concerning the Plan.”  Welfare plan investigators have become more interested in Affordable Care Act notices including:


Grandfather notice – if a plan was grandfathered during the audit period, the plan must provide proof that the grandfather notice was provided to participants.

Notice describing enrollement opportunities for children up to age 26 for plans in dependent coverage.


It can take a year or more before the plan receives a findings or conclusion letter due to the complexity of the laws, the amount of documentation to be reviewed, the caseload of the investigator, and the regional office.  If the DOL has any findings it is important to respond to each and every finding.


If possible it is better to discover and correct any possible issues before an investigation occurs.  The plan should:


  • Maintain up-to-date plan documents and ensure that all plan provisions are being followed.
  • Understand the scope of services performed by service providers.
  • Keep advisors updated regarding any plan changes or operational changes.


For more information regarding a plan audit, please contact Sarah Robinson, a partner in our Multi-Employer Benefit Plan Group, by calling 518-456-6663 or [email protected].