1. Statutory Requirements. The Employee Retirement
Income Security Act (ERISA) expressly confers upon the
Secretary direct responsibility and authority to investigate
fiduciary violations of Title I of ERISA. In accordance with
that authority, Program 48 will be used to investigate
violations involving ERISA, Title I, part 4, sections 402,
"Establishment of plan," 403, "Establishment of
trust," 404, "Fiduciary duties," 405,
"Liability for breach of co-fiduciary," 406,
"Prohibited Transactions," 407, "10 percent
limitation with respect to acquisition and holding of employer
securities and employer real property by certain plans,"
409, "Liability for breach of fiduciary duty," and
410, "Exculpatory provisions; insurance."
Additionally, Program 48 will be used to investigate plans
which have been terminated but whose assets have not been
allocated according to the provisions of sections 403(d)(1)
and 403(d)(2) of ERISA. Section 403(d)(1) provides that
terminated pension plans which are not subject to the PBGC
insurance regulations will allocate their assets in accordance
with the provisions of section 404 of ERISA. Section 403(d)(2)
provides that terminated welfare plans shall distribute their
assets in accordance with the plan documents.
2. Elements of Fiduciary Violations.
The following are basic elements of ERISA fiduciary
violations:
Subject plan and the assets involved
are covered by the provisions of part 4 of Title I of ERISA
in accordance with the requirements of ERISA section 401.
At least one violator was a fiduciary
within the meaning of section 3(21) at the time of the
occurrence of the breach.
The action(s) taken constituted a
breach(es) of the fiduciary's duties by virtue of the fact
that the fiduciary violated one or more of ERISA sections
402, 403, 404, 405, 406, 407, and 410. It must be shown that
the action or actions taken by the fiduciary are not covered
by statutory or regulatory exemptions or regulatory
variances.
Sufficient evidence must be collected
to satisfy the various statutory definitions of terms
contained in part 4. For example, if a party in interest
transaction is involved, it must be established that the
individual or entity is a party in interest within the
meaning of section 3(14).
Each fiduciary violation must fall
within the timeliness provisions of section 413.
3. Case Opening. Consistent with
National and Regional priorities, Program 48 cases will be
opened (a) when information is acquired by the field office,
which indicates a past or prospective violation of one or more
of the ERISA sections set forth in paragraph 1 of this chapter
or (b) when directed by the National Office.
The case opening form should describe briefly the
reasons for opening the case as well as any materials reviewed
prior to the case opening and the dates of such review. The
summary section of the case opening form will contain a description of
the pertinent facts that form the basis for opening an
investigation, including an explanation of the nature of the
complaint or other information received; the ERISA related
issues raised by such complaint or information; and the
specific ERISA sections potentially involved. The summary
information provided on the case opening form should include a
statement setting forth the results of the preparer's search
of the EBSA global indices.
Any materials reviewed which constituted
the basis for the case opening should be identified and dated.
4. Complaint-Generated Cases.
Consistent with RO priorities, the RO will open investigations
as soon as practical after allegations of fiduciary violations
deemed worthy of investigation are received from plan
participants, plan officials, employees, employee benefit plan
practitioners, the general public, or other federal, state, or
local governmental agencies.
5. RO-Generated Cases. Consistent
with RO priorities, the RO will open a case when it acquires
evidence of a possible fiduciary violation from a review of
its files, the plan's annual report, media information, or
from any other applicable targeting approach.
6. Preliminary Investigative Activities.
Prior to case opening or the on-site investigation the
Investigator/Auditor assigned to the case should do the
following:
Obtain all recent financial reports
filed by the Plan.
If the plan has filed an exemption
application pertaining to a prohibited transaction, a
complete copy should be obtained from the National Office
and reviewed before the investigation is undertaken.
7. Planning the Investigation.
Proper planning and preparation by the Investigator/Auditor is
most important in the successful conduct of a fiduciary
investigation.
Written Plan. At the RD's discretion,
investigative plans shall be prepared for Program 48 cases.
When an investigative plan is required, the
Investigator/Auditor will promptly prepare the plan in the
form of a memorandum to the supervisor. A written
investigative plan is meant to aid both supervisors and
Investigators/Auditors in using limited resources in the
most systematic and productive way. See Figure 1 for the
suggested format to be used in preparing the investigative
plan.
After consultation with the
Investigator/Auditor, the supervisor will determine how many
staff days will be required to complete the plan and this
information will be included in the plan.
Review by Supervisor. The supervisor
will review the investigative plan and, after having made
any necessary changes, will initial and date the plan. The
original plan will be placed in the file after the
Investigator/Auditor has been notified of its approval.
Updating the Plan. Whenever the
Investigator/Auditor or the supervisor concludes that a
major change in the original plan or a significant amount of
additional investigation is warranted, a written update of
the plan will be prepared by the Investigator/Auditor. As
appropriate, the supervisor will review and approve the
updated plan. See Figure 2 for the suggested format to be
used in updating the plan.
8. Disclosure of Basis of Investigation.
By established policy, EBSA generally does not reveal the
basis or source of an open investigation. See also Chapter 20.
9. Investigation of Possible Criminal
Violations. The procedures set forth in Chapter 52 will be
followed when possible criminal violations of ERISA sections
411, 501, 511, and related sections of Title 18 U.S.C. are
uncovered.
Dual Responsibility. In those
cases where both potential fiduciary and criminal violations
are found, and it is decided that a criminal investigation
is appropriate, a separate Program 52 case will be opened to
investigate the possible criminal violations. The RD must
decide whether to work both cases at the same time or to
work them sequentially. Criteria to assist in such a
decision are set forth in paragraph 12 of Chapter 52.
Postponement or Delay Requests.
Federal, state, or local governmental agency requests for
EBSA to postpone or delay a civil ERISA investigation, or
the interviewing or taking of testimony of witnesses, shall
be considered after receipt of a written request, or an oral
request which is confirmed in a letter to the requesting
agency by the RD, stating the reasons why a postponement or
delay is appropriate and the length of the anticipated
delay. The OE/DFO Chief should be consulted prior to any
EBSA decision or response.
Prohibited Persons.
If the investigation discloses possible violations of
ERISA section 411, a Program 47 case should be opened.
10. Fiduciary Investigations Involving
Health Plans. In the event an RD determines that a health
plan review is to be opened as a Program 48 investigation, an
Investigator/Auditor will ordinarily use the part 7
investigative guide (see Chapter 53, Figure 3) in addition to
any other investigative steps that may be appropriate. If the
investigator finds that a large company sponsors several
covered group health plans, consideration may be given to
investigating each of the plans. Fiduciaries are to be advised
of findings of part 7 violations in writing. Chapter 53,
Figure 7 provides pattern Voluntary Compliance Letter language
for use where no violations other than part 7 violations were
found. Generally, violations under part 7 do not give rise to
per se violations of part 4. Assertions of fiduciary
misconduct under ERISA section 404 must stand on their own
specific elements of proof.
11. Apparent Violations of
Participant Rights. If the investigation discloses
possible ERISA section 510 violations involving acts against a
participant or beneficiary for exercising any right to which
he/she is entitled under the provisions of an employee benefit
plan, or interfering with the attainment of any right to which
the participant may become entitled, a Program 43 case will be
opened immediately.
12. Fiduciary Violations Involving Gifts and
Gratuities. Investigations may disclose possible
fiduciary violations involving a plan fiduciary’s
acceptance, from a party dealing with the plan, of
consideration such as meals, gifts, entertainment, or
expenses associated with educational conferences. In such
cases, the Investigator/Auditor should determine whether the
facts support an allegation that the receipt of gifts,
gratuities, or other consideration were for the fiduciary’s
personal account and received in connection with a
transaction or transactions involving the assets of the plan
as required for a violation of ERISA §406(b)(3). The
Investigator/Auditor should also determine whether the
fiduciary or the plan maintained a reasonable written policy
or plan provision governing the receipt of items or services
from parties dealing with the plan and whether the fiduciary
adhered to that policy.
Further, for enforcement purposes only, the
Investigator/Auditor generally should adhere to the
following guidelines:
(1) The Investigator/Auditor should treat as
insubstantial, and not as an apparent violation of ERISA §
406(b)(3), the receipt by a fiduciary (including his or her
relatives) of the following items or services from any one
individual or entity (including any employee, affiliate, or
other related party) as long as their aggregate annual value
is less than $250 and their receipt does not violate any
plan policy or provision: (a) gifts, gratuities, meals,
entertainment, or other consideration (other than cash or
cash equivalents) and (b) reimbursement of expenses
associated with educational conferences.
(2) The Investigator/Auditor should not treat the
reimbursement to a plan of expenses associated with a plan
representative’s attendance at an educational conference
as a violation of ERISA § 406(b)(3) if a plan fiduciary
reasonably determined, in advance and without regard to
whether such expenses will be reimbursed, that (a) the plan’s
payment of educational expenses in the first instance was
prudent, (b) the expenses were consistent with a written
plan policy or provision designed to prevent abuse, (c) the
conference had a reasonable relationship to the duties of
the attending plan representative, and (d) the expenses for
attendance were reasonable in light of the benefits afforded
to the plan by such attendance and unlikely to compromise
the plan representative’s ability to carry out his or her
duties faithfully in accordance with ERISA. The fiduciary’s
determination should be in writing.
13. DOL-IRS, Bonding, Reporting and
Disclosure Checklists. As part of a fiduciary
investigation, an Investigator/Auditor will complete an IRS
checklist. For further guidance, see Chapter 12, Relationship
with the IRS. Also, the Investigator/Auditor will ordinarily
determine whether a plan is in compliance with the bonding,
reporting, and disclosure provisions of ERISA by completing an
ERISA Bonding Checklist (Figure 3) and a Reporting and
Disclosure Checklist (Figure 4). These checklists will be
filled out in fiduciary cases and retained in the RO workpaper
case file unless violations are uncovered, developed, and
reported in the ROI. If the RO discovers a potential bonding,
reporting, or disclosure violation in the context of a Program
48 case, the Investigator/Auditor may attempt to resolve such
a violation during the course of the investigation. In the
event that a bonding, reporting, or disclosure violation is
corrected prior to completion of the ROI in the RO, the
Investigator/Auditor will report the correction in the ROI and
include documentation of the correction in the exhibit file.
14. Investigative Activity
Investigation Guidelines. Items
in the investigation guidelines (Figure 6) should not be
considered as either mandatory or all-inclusive, but
should be used to the extent deemed appropriate for the plan
or other entity under review. The guidelines are arranged in
two parts: Part I, Background Information, such as data
related to the type and size of plan, the responsible
parties, etc. and Part II, Review Procedures, for exploring
compliance with ERISA and for probing for potential
violations of ERISA, particularly fiduciary violations.
Additional investigative steps should be performed when
exploration of areas not covered in the guidelines is needed
to develop and investigate possible violations.
Additional Investigative Activity.
The scope of the investigation may be expanded beyond the
original allegations or leads to include additional areas of
inquiry when new information has been uncovered.
15. Subpoena. Determine the need for
a subpoena and, if deemed necessary, submit the request
according to established procedures described in Chapter 33.
16. Receipts for Books, Records, and
Documents Obtained. When it is necessary to physically
move documentary evidence or property such as books, records,
canceled checks, bank statements, receipt books, invoices,
vouchers, letters, memoranda, etc., offsite pursuant to
subpoena or when voluntarily furnished (even if only to
photocopy and immediately return), the Investigator/Auditor
will give the organization or individual providing the
documents a signed, itemized, and dated receipt for the
material, and will retain a copy of the receipt in the case
file. For further guidance, see Chapter 32, Collection and
Preservation of Evidence.
17. Investigations Involving
Applications for Exemptions
During some fiduciary investigations,
the RO may discover that a plan has a pending application
for exemption from a prohibited transaction. In such an
event, the RO should advise OE/DFO of the pending
application and OE/DFO will coordinate with OED. In no
instance should the RO provide to OED information obtained
during the course of the investigation.
The RO should not assume that, because
the factual situation under investigation is similar to
previously granted individual exemptions, further
investigation is unnecessary. The investigation should
continue to its completion.
18. No Violations Found. When the
investigation does not identify any violation(s), the
Investigator/Auditor will prepare a Closed ROI (see Figure
7 and Tabs J, K and L, and M for sample formats) and a pattern closing
letter (see Chapter 34, Figure 9 to be sent to plan
officials. A conference may be held with the plan officials in
addition to sending the pattern closing letter. In instances
when the RD determines that it is not advisable to send a
closing letter, a notation will be made to the file and OE/DFO
will be notified of the decision not to issue a closing
letter.
19. Technical Advice. When the RO
needs technical advice concerning the existence of actionable
violations, appropriate remedial procedures including
voluntary compliance, or other such matters, it will contact
OE/DFO for assistance.
20. Violations/Voluntary Compliance (VC).
When there are apparent violations, the RD will determine, in
accordance with National Office policy, whether initially to
pursue corrective action through voluntary compliance. If it
is decided that correction of the apparent violations should
be pursued through voluntary compliance, the RO will issue a
VC notice letter (see Chapter 34, Figure 1) which will advise
plan fiduciaries or other responsible parties of the results
of the investigation and the section(s) of ERISA violated. The
letter will invite the recipients to discuss with the RO how
the violation(s) will be corrected and how any losses will be
restored to the plan.
Although some cases may be suitable for
resolution through voluntary compliance, neither the RO nor
EBSA is bound to seek voluntary compliance in all cases.
21. Report Writing for Voluntary
Compliance Cases
In voluntary compliance cases
involving limited or non-complex issues, the
Investigator/Auditor will prepare a VC notice letter (see
Chapter 34, Figure 1) and statute of limitations matrix (Figure
8) for review. If the basis for the asserted
violations or the need for the suggested corrective action
is not apparent from the VC notice letter alone, a detailed
memorandum, Checksheet ROI, or Action ROI may be required by
the RD.
In voluntary compliance cases
involving numerous or complex issues, the
Investigator/Auditor will prepare for the RD's review a
detailed memorandum explaining all the issues and citing
supporting facts, a VC notice letter for the plan officials
or other affected parties, and a statute of limitations
matrix. The documentation of the facts presented in the
detailed memorandum should be available in the RO/DO. At the
RD's discretion, a Checksheet ROI or an Action ROI may be
prepared in such cases (See paragraph 21.a. below).
In all VC cases, VC notice letters and
closing letters will be approved and signed by the RD prior
to issuance. Copies of all approved and dated VC notice and
corresponding closing letters sent to plan officials or
other related parties should be forwarded to OE/DFO. The case
and program number should be noted on all VC notice and
closing letters.
In voluntary compliance cases in which
full compliance is achieved, or if partial or no compliance
is achieved but the case will not be referred for
litigation, the Investigator/Auditor may prepare a Closed
ROI in an appropriate format as set forth in Tabs K, L, and
M or Figure 7. If an Action ROI has already been prepared,
the Investigator/Auditor may prepare a supplemental
memorandum to reflect the outcome of the voluntary
compliance process, rather than using the Closed ROI
formats. All 502(l) and 502(i) civil penalty issues must be
resolved before a case may be closed.
In a voluntary compliance case in
which partial or no compliance is achieved and the case is
considered as appropriate for litigation referral, the
Investigator/Auditor will prepare an Action ROI in the
format outlined in Figure 9.
22. Action Reports. In addition to
the situations noted in paragraph 20, the Investigator/Auditor
will prepare an Action ROI together with exhibits and a cover
memorandum whenever (1) the RD determines that violation(s) of
part 4 of Title I of ERISA have been established by the
investigation and remain uncorrected, and (2) the program
enforcement priorities would be served by referral for
litigation.
The Action ROI together with exhibits and a
cover memorandum from the RD will be sent to the National
Office or RSOL, as appropriate. In those instances where the
Action ROI is referred to PBSD or RSOL, a copy of the cover
memorandum and ROI, without exhibits, will simultaneously be
sent to OE/DFO.
Preparation of Action ROIs. An
Action ROI should set forth facts obtained during the course
of the investigation and necessary to cover each element of
the offense(s) believed to have been revealed. The ROI
should also set forth evidence, if any, which contradicts or
does not support the elements of proof. It should
furthermore contain facts regarding each element of any
statutory or administrative exemption which may apply. The
ROI should normally not state that certain elements have
been met unless it has also set forth the facts from which a
conclusion may be drawn. Every Action ROI should be
accompanied by both a list of exhibits attached to the ROI
and a list of file material, documents, and workpapers
maintained in the field office, which were obtained or
produced in the course of the investigation. As noted above,
the format to be used in the preparation of an Action ROI is
set forth in Figure 9.
In summary, the following general rules
apply to the preparation of all ROIs:
All material allegations and leads
pursued during an investigation will be reported.
The ROI should be objective and not
contain legal analysis, recitation or paraphrasing of
ERISA, assumptions, the Investigator's/Auditor's opinion,
or other extraneous matters. Such items are more
appropriately included, if at all, in a cover memorandum
accompanying the ROI.
All significant facts presented in
the report must be supported by either a reference to an
exhibit (Action Reports) or by file material and
workpapers (Closed Reports). The page and paragraph number
of the exhibit should be cited when exhibits exceed two
pages in length.
The report should be concise and
well-written. Terms, individuals, or abbreviations should
be fully identified the first time they are used.
The significant facts contained in
the exhibits should be reported in the ROI.
ROIs are to be written promptly
after an investigation is completed.
Regional Director Cover Memorandum
Format. The RD's cover memorandum, which must accompany
each Action ROI, should include (1) a summary of the facts
demonstrating the violation(s); (2) a discussion of ERISA
sections violated; (3) an explanation of any loss
computation; (4) a brief statement of the applicable statute
of limitations date(s); (5) a description of the potential
defendants' defenses and financial condition, if known; (6)
a summary of any voluntary compliance efforts; (7) the
existence (if any) of a parallel criminal investigation; (8)
recommendation(s) for remedies to be sought, and (9)
appropriate footnotes on page 1 reflecting IRC 6103
material or referrals to OCA. The format
for the RD cover memorandum is set forth at Figure
10.
23. Case Closing-No Other Action.
When voluntary compliance is pursued and full, partial, or no
compliance is achieved, the case closing procedures outlined
in Chapter 34 are to be followed.
24. SBREFA Notice. In accordance
with the provisions of the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), the Small Business
Administration has established a National Small Business and
Agriculture Regulatory Ombudsman and 10 Regional Small
Business Regulatory Fairness Boards to receive comments from
small businesses about federal agency enforcement actions. The
Ombudsman annually evaluates enforcement activities and rates
each agency’s responsiveness to small businesses. If a small
business wishes to comment on the enforcement actions of EBSA
it may call 1-888-REG-FAIR (1-888-734-3247) or write to the
Ombudsman at 409 3rd Street SW, MC 2120, Washington, DC 20416.
Notice of the right to comment to the
SBREFA Ombudsman will be provided by copy of the EBSA Customer
Service Standards pamphlet to all plan sponsors, plans, or
plan service providers with less than 100 participants or
employees during the course of ERISA Title I civil
investigations. Discretion is granted to EBSA Regional
Directors regarding the timing of the delivery of the
pamphlet/notice on a case-by-case basis. The case file must
reflect appropriate documentation of the SBREFA notice.
The right to file a comment with the
Ombudsman does not affect EBSA’s authority to enforce or
otherwise seek compliance with ERISA. The filing of a comment
by a small business with the Ombudsman is not a substitute for
complying with an EBSA subpoena or addressing EBSA’s
proposed corrective action in a timely manner to protect the
business’ interests.
Memorandum Format for Program 48
Investigative Plan
Subject:
Name of Plan
Location
EIN
File No.
To:
Supervisor
Investigative Plan for Subject Case
I. Results of Search of Indices and
Exemption Applications
Summarize any pertinent information in the
Regional Office files, which might have a bearing on the
investigation.
II. Analysis and Scope of Investigation
A. Allegations/Investigative Leads/Basis
for Investigation.
Analyze each allegation, investigative
lead, or area of investigation within the context of the
applicable sections of the statute, interpretations, and
regulations. Identify each allegation, investigative lead,
or area of investigation seriatim using the following
general outline:
1. Set forth the issue being
investigated, being as concise as possible without
sacrificing the meaning.
Indicate which sections of ERISA,
if known, appear to have been violated, together with
appropriate references to any interpretations and/or
regulations.
List the elements of proof needed
to establish that a violation has occurred.
Describe the scope of the proposed
inquiry. (This section of the work plan can and should
be used to limit, insofar as possible, the length of the
inquiry, and to determine the point at which the
investigation will be terminated absent findings of
potential violations. A well-planned investigation
should be able to predict how much investigative time
and effort should be expended before it becomes more
costly than the benefits to be derived).
III. Planned Investigative Activity
Indicate what records will be reviewed
and/or what interviews will be conducted and what information
and documentation will be solicited to fully investigate each
issue. The following outline should be used in setting out the
planned investigative activity.
General.
Set forth any investigative activity not
related to resolving a specific issue such as verifying the
adequacy of the plan's bond.
Allegation/Lead/Area of Investigation.
Identify all the activity needed to fully
investigate the allegation/lead.
Allegation/Lead/Area of Investigation
#2.
Repeat as in B, for all
allegations/leads.
Investigator's/Auditor's Name, Signature,
and Date
Approved: ____________________
Date: ____________________
(Initials of Supervisor)
Estimate of the number of staffdays
required to complete the investigation:
Are there separate accounts in the books of the employer or
do separate funds or other properties exist in the name of the
Plan?
Note: If item 1 or 3 is answered “Yes,”
bonding is usually required. If item 2 is answered “Yes,”
bonding may be required. Determine whether insurance dividends
belong to the Plan or to the Employer. If they belong to the
Plan, bonding is required. If cash surrender values exist and
the Plan can obtain those values, bonding is required.
4.
Are benefits paid from the general
assets of the plan Sponsor?
5.
Is there any segregation of the Plan Funds?
6.
Are there separate accounts on the books or separate books
of account for the Plan?
Note: If item 4 is answered “Yes” and
items 5 and 6 are “No,” the Plan is unfunded and bonding
is not required.
7.
Do any trustees or Plan employees have:
a. Physical possession of Plan assets?
b. The power to obtain physical possession of plan assets?
c. The power to transfer assets?
d. The authority to disburse Plan funds directly or
indirectly?
e. The authority to endorse checks?
f. The authority to make investments?
Note: If any of items 7a through 7f is
answered “Yes,” “handling” of Plan funds is indicated
and bonding is required for each individual who has the above
authority. If a corporate trustee holds the Plans assets, but
the Plan trustees can direct the payment of benefits by the
corporate trustee or direct the investments to be made by the
corporate trustee, the Plan trustees “handle” funds and
bonding is required.
8.
Does the bond provide for payment to the
Plan in the event of loss?
Note: The Plan must be named as an “insured”
and the payover rider must be attached unless the Plan is the
sole insured under the bond. The definition of employee in the
bond must cover all persons who “handle” funds.
9.
How many Plans are covered by the bond?
10.
How many non-plan entities are covered by the bond?
11.
Is the bonding company listed in Treasury Circular 570?
Name of Company
______________________________
Policy Lapse Date ______________________________
12.
Is the Plan named as the insured?
13.
If more than one Plan or Plan(s) and the Plan Sponsor are
covered, is a pay-over rider attached?
14.
If the bond contains a deductible, is an elimination of
deductible rider attached with respect to the Plan?
15.
Does the bond protect against fraud or dishonesty?
16.
Does the bond cover all persons who “handle” funds?
Note: Without a “Definition of Employee”
rider, a bond generally excludes “officers, Directors, and
Trustees” from coverage.
17.
Does the bond have a one-year discovery
period?
18.
Does the Plan have fiduciary liability insurance?
Bonding Computation Sheet
The amount of bond shall be fixed at the
beginning of each reporting year and is determined by the
funds “handled” by plan officials during the preceding
year.
A. Total assets, beginning of preceding
year
1.
Cash (on hand and in banks)
________________
2.
Governmental securities
________________
3.
Corporate debt securities
________________
4.
Corporate stocks (common and preferred)
________________
5.
Shares in registered investment companies
________________
6.
Real Estate
________________
7.
Mortgages
________________
8.
Loans other than mortgages
________________
9.
Value of interest pooled fund
________________
10.
Value of unallocated group annuity
contracts, cash surrender values
________________
11.
Other assets
________________
Total A
________________
B. Receipts during preceding reporting year
1.
Contributions
________________
2.
Interest
________________
3.
Dividends
________________
4.
Rents
________________
5.
Profit from sale of assets (sale price less market value
at beginning of preceding reporting year or value at
transactions date if purchased during the preceding year)
Note: The proceeds (profit or loss) from
the sale of assets have not been included in this bonding
computation since it is not possible to identify the necessary
valuations to obtain this specific computation from the annual
report.
________________
6.
Other
________________
Total, B
________________
Total, A and B
________________
C. Applicable Adjustments
1.
Accrual basis accounting:
Plus accts. receiv. – beginning of year
Less accts. receiv. – end of year
1. Is the plan exempt from reporting
requirements?
If yes, explain.
B.
Summary Plan Description (SPD)
Does the SPD
meet the style, format and content
requirements? (Regs. 2520.102-2 and 3)
Date of SPD:
_____________ Is SPD more than five years
old? If yes, explain. (Regs.
2520-104b)
Has SPD been
provided to participants and beneficiaries
receiving benefits within 120 days after the
Plan is subject to ERISA or, for new
participants, within 90 days after becoming
covered by the Plan? (Regs. 2520-104b)
C.
Material Modifications
If material modifications occurred, has a
Summary of Material Modifications been disclosed to participants and beneficiaries within 210 days
after the end of the Plan year in which the change was made?
(Regs. 2520.104a-7 and 2520.104b-3).
D.
Summary Annual Reports (SAR)
Has SAR been disclosed to Plan
participants and beneficiaries within nine months after the
close of the plan year? (Regs. 2520.104b-10)
E.
Annual Reports (Form 5500 Series) (AR)
Have ARs been filed with the
DOL/IRS
within 270 days after the end of the Plan year? (Regs.
2520.104a-5)
If applicable, were Schedules A, B,
and/or C included? (Regs. 2520.103-1)
If applicable, has form 5310
(Application for Determination upon Termination; Notice of
Merger, Consolidation or Transfer of Plan Assets or
Liabilities; Notice of Intent to Terminate) been filed with
the IRS and/or PBGC? (Instructions for Form 5310)
If applicable, has a “Final” AR
(Form 5500 Series been filed upon complete distribution of
all assets?
If applicable, has PBGC been notified
of a merger, transfer of assets or liabilities or
termination of a Multi-employer Plan covered by the PBGC
Insurance Program?
For Defined Benefit Plans: Has form
PBGC-1 been filed?
G.
Disclosure - Other
Are copies of the Plan Description,
latest Annual Report and documents under which the Plan was
established or operated made available to Plan participants
at the principal office of the administrator? (Regs.
2520.104b-1)
For plan that charge for documents, is
the charge reasonable? (Regs. 2420.104b-30)
Does the Plan respond to written
disclosure requests within 30 days? (Sec. 502(c)(1))
For those plans to which the vesting
standards apply, has a statement concerning the nature,
amount, and form of deferred vested benefits been provided
to those participants that have terminated employment or had
a one-year break in service? (Sec. 105(c))
For participants or beneficiaries with
claim denials, does the Plan provide notice of denial within
required timeframes? (Reg. 2560.503-1(i)(2))
For health plans covering more than 20
employees:
Has each covered employee and his or
her spouse been notified of their continuation rights
under COBRA?
Is each new employee and his or her
spouse notified of their rights under COBRA at the time
they become covered for health insurance under the Plan?
Does the Plan provide written
notification to employees and their spouses of their
rights to continued coverage under COBRA within 14 days of
the plan administrator being notified that a qualifying
event has occurred?
Individual Benefit Statement Compliance
Checklist
Participant-Directed Individual Account Plans
[For use with plans that permit participants to direct the
investment of assets held in their individual account]
Timing:
1. Within what period of time following
the end of the quarter(s) were statements furnished to
participants? ______________
2. If statements were furnished within a
period longer than 45 days following the end of the
quarter(s): a) Within what period were statements
(typically) furnished? ______________. b) What was the
reason given for taking longer than 45 days?
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
3. With regard to furnishing benefit
statements to plan beneficiaries, were statements generally
furnished within a reasonable period of time (such as 30
days) following receipt of a written request, taking into
account the circumstances of the request?
Yes ________ No ________. If “No”, what was the reason
given for the longer period?
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
Content:
Did the benefit statement furnished or
made available to participants contain the following
information:
Yes
No
1. Total accrued benefits (based on
latest available information)
_____
_____
2. Nonforfeitable benefits or
earliest date on which benefits would become
nonforfeitable (based on latest available
information)
_____
_____
3. Explanation of permitted
disparity or floor offset, if applicable
_____
_____
4. Value of each investment (as of
most recent valuation date)
_____
_____
5. Explanation of any limitations or
restrictions imposed by plan (rather than investment
funds) on right to direct investments
_____
_____
6. Explanation of importance of
well-balanced and diversified portfolio (Note: model
(not required) language provided in FAB 2006-03)
_____
_____
7. A statement referring
participants to DOL Web site for sources of
information on investing and diversification (Note:
website link provided in FAB 2006-03)
_____
_____
Individual Benefit Statement
Compliance Checklist
Individual Account Plans Without Participant Direction
[For use with plans that do not permit
participants to direct the investment of assets held in
their individual account. Note: the ability to obtain a
participant loan is not participant direction for this
purpose]
Timing:
1. Within what period of time following
the end of the year were statements furnished to
participants? ______________
2. If statements were furnished within a
period longer than 45 days following the end of the year: a)
Within what period were statements (typically) furnished?
______________. b) What was the reason given for taking
longer than 45 days?
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
3. With regard to furnishing benefit
statements to plan beneficiaries, were statements generally
furnished within a reasonable period of time (such as 30
days) following receipt of a written request, taking into
account the circumstances of the request?
Yes ________ No ________. If “No”,
what was the reason given for the longer period?
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
Content:
Did the benefit statement furnished or
made available to participants contain the following
information:
Yes
No
1. Total accrued benefits (based on
latest available information)
_____
_____
2. Nonforfeitable benefits or
earliest date on which benefits would become
nonforfeitable (based on latest available
information)
_____
_____
3. Explanation of permitted
disparity or floor offset, if applicable
_____
_____
4. Value of each investment (as of
most recent valuation date)
_____
_____
Individual Benefit Statement Compliance
Checklist
Defined Benefit Plans
Election:
Defined benefit plans are required to
furnish benefit statements to participants and beneficiaries
at least once every 3 years OR such plans may elect to
furnish at least once a year a notice informing participants
of the availability of a pension benefit statement and how
to obtain such a statement.
Plan has elected to furnish benefit
statements every three years (earliest statement required to
comply with the new requirements would be due for the 2009
plan year). Yes ________ No________
(Note: If the plan is furnishing or
intends to furnish benefit statements annually, although not
required to do so, answer “Yes.”)
If “No,” has the plan provided (or
does the plan intend to) furnish an annual notice (Note:
first required annual notice would be for the 2007 plan
year). Yes ________ No ________
Date on which notice was (or will be)
furnished ______________
Annual Notice Alternative:
If a plan has elected to furnish an
annual notice, does the annual notice:
Yes
No
1. Explain that participants have a
right to request and receive a pension benefit
statement?
_____
_____
2. Explain how participants can
request and receive a pension benefit statement from
the plan?
_____
_____
Pension Benefit Statement:
Yes
No
1. Did the plan provide a pension
benefit statement to each participant with
nonforfeitable benefits and who is employed by the
employer maintaining the plan at the time the
statement is furnished?
_____
_____
2. Did the benefit statement furnished
or made available to participants contain the
following information:
_____
_____
3. Total accrued benefits (based on
latest available information)
_____
_____
4. Nonforfeitable benefits or
earliest date on which benefits would become
nonforfeitable (based on latest available
information)
_____
_____
Statements Upon Request
1. With regard to furnishing benefit
statements to participants and beneficiaries following
receipt of a written request, were statements generally
furnished within a reasonable period of time (such as 30
days) following receipt of a written request, taking into
account the circumstances of the request?
Yes ________ No ________. If “No”, what was the reason
given for the longer period?
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
2. Did the furnished statements contain
the “content” information described above? Yes ________
No ________
List the basic books and records of the
plan, e.g., contribution records, participant hours/earnings/
benefits, records, investment policies, claim forms and files,
bank statements, trust reports, cash books, journals, ledgers,
inventories, investment reports, etc
Determine that the employee benefit
plan has been established pursuant to a written instrument.
Determine that the written instrument
provides for one or more named fiduciaries.
Determine that the plan
provides a procedure for
establishing and carrying out a funding policy consistent
with plan objectives.
describes any procedure for
allocating responsibilities for the operation and
administration of the plan.
provides a procedure for amending
the plan and for identifying the persons who have
authority to amend the plan.
specifies the basis on which
payments are made to and from the plan.
Fiduciary - Establishment of Trust
Ascertain that assets of the plan are
held in trust [unless the assets are insurance contracts,
are held by insurance companies or are otherwise exempted by
section 403(b)].
Fiduciary Duties
Examine all or selected expenses paid
or incurred by the plan for the last year in an attempt to
identify expenses which were not incurred exclusively to
provide benefits to participants and their beneficiaries or
to defray reasonable plan administrative costs. Examine
income and expense statements and the general ledger
accounts for unusual expenses (accounts). Examine selected
cash disbursements and non-cash transactions and
supporting documentation for transactions, which appear
unrelated to operating the plan.
Examine administrative expenses for
categories that appear unreasonably costly in relation to
other similar plans.
Explore the management of plan
operations by examining whether contributions are collected timely; cash
is deposited promptly; investment certificates are properly
safeguarded; assets are appropriately insured; reserves and
retentions held by insurance carriers are not unreasonable;
tax qualified status with IRS is maintained; PBGC insurance
is current.
Analyze plan investments to ascertain
extent of diversification. Consider diversification:
among types of investments, i.e.,
stocks, bonds, real estate, etc.;
within types, i.e., is common stock all of one or two
companies; and
geographical areas of investment.
Determine if investment portfolio appears
to adhere to investment policy in plan instruments, minutes
of meetings, etc.
Read the basic plan documents and note
substantive policy direction (other than investment policy)
to the plan fiduciaries and examine if it is being followed.
Inquire whether any plan funds are
invested in assets which are beyond the reach of United
States courts in contravention of section 404(b).
Fiduciary - Co-Fiduciary Liability
Examine selected allocations of fiduciary
responsibilities (other than trustee responsibilities) to
both named fiduciaries and other fiduciaries, to determine
if they have been allocated in accordance with the
instrument under which the plan is maintained.
Fiduciary - Prohibited Transaction
Obtain a list of parties in interest
from the plan. Compare to the lists of plan sponsors, plan
managers, and service providers obtained in Part I of these
guidelines. Determine how plan management identifies parties
in interest and how plan fiduciaries prevent inadvertent
party in interest transactions from occurring.
Inquire as to any applications for
individual exemptions from prohibited transactions for the
plan and their status. Compare with OED information
available at RO, and clarify if necessary. Also be aware of
applicable statutory and class exemptions.
For selected sales, purchases, and
lease property transactions by the plan during the period
being investigated, examine property records and supporting
documentation to ascertain if any of the transactions were
between the plan and a party in interest.
Examine accounts receivable, accounts
payable, cash receipt records, and cash disbursement records
for the period under examination in an attempt to identify
any loan of money or extension of credit by the plan to or
from a party in interest.
For the period being investigated,
examine expense accounts representing acquisition of goods,
services or facilities by the plan. For selected
transactions, ascertain whether they were acquired by the
plan from a party in interest.
Inquire as to any plan assets, which
have been transferred. Ascertain whether such assets were
transferred to parties in interest.
For some of the larger and continuous
transactions in which the plan engages, e.g.,
purchases/sales of securities, purchases/sales of
properties, placing of insurance contracts, advisory and
consulting fees, etc., ascertain the organizations that
acted as broker, agent, consultant, etc. Determine whether
any of the plan's fiduciary have had any ownership or direct
involvement in these organizations, or have received any
remuneration from their organizations.
Fiduciary - Employer Securities and Real
Property
Request a listing of all employer
securities and properties held by the plan. Ascertain
whether any such post-ERISA acquisitions have resulted in
holdings by the plan of employer securities and properties
in excess of 10% of total plan assets (measured on a fair
market value basis).
Bonding
The Bonding Checklist and Bonding
Computation Sheet will ordinarily be completed for every
plan. See Figure 3.
Reporting and Disclosure
The Reporting and Disclosure Checklists will ordinarily be completed for every plan. See Figure
4 and Figure
5.
Verifying Financial Data Reported
Verify the accuracy of plan financial
data reported to DOL on the most recent annual report by:
Determining whether the plan is exempt
from completing financial data on annual report forms and
from engaging an independent qualified public accountant
pursuant to DOL regulation.
Determining for non-exempt plans that
the annual report, related schedules, and accountant’s
opinion have been completed and reported, as appropriate.
Claims Procedures
Determine whether plan instruments and
operating procedures provide for:
Prompt handling of claims from
participants and beneficiaries.
Notice in writing to participants and
beneficiaries of claim denials and reasons therefore.
Full and fair review by a named
fiduciary of claim denials.
U.S.
Department of Labor
Employee Benefits Security Administration
This document is the
property of the Employee Benefits Security
Administration.
Its contents are not to be disclosed to unauthorized
persons.
File No.
Subject: (Fiduciary
Name and
Address of Plan)
Date
Or Related Entity
By Investigator/Auditor
Approved by
EIN/PN
Status: Closed
Predication
State the reasons for the case opening
and for conducting an investigation.
Background
This can be limited to setting forth the
facts about the subject, e.g., type, identity of all
principals, identity of plan sponsor, benefits provided,
number of active and retired participants, the most recent
information on amounts of assets (gross and net), etc.
Bonding And Reporting And
Disclosure
Cite the facts to establish that the
bonding and reporting and disclosure requirements have been
met;
or
Cite the facts to establish that the
bonding and reporting and disclosure requirements were not
met and note corrective action taken when there are no other
apparent ERISA violations;
or
Cite the facts to establish that the
bonding and reporting and disclosure requirements were not
met and note the corrective action taken in the Issues and
Findings Section when there are other apparent ERISA
violation(s) resolved through voluntary compliance or other
dispositive action was taken (i.e., bonding and reporting
and disclosure violations referred to the National Office.)
Issues & Findings
Set forth the allegation or issue.
Cite the facts to show that the
allegation or issue was not a violation. In cases where
violations are substantiated, cite the facts to show that
voluntary compliance was achieved including the monetary
results, if any, or other dispositive action.
Repeat as above for each allegation or
issue.
Other Findings
This section can be used to present facts
or any other investigative activity not previously mentioned.
U.S.
Department of Labor
Employee Benefits Security Administration
This document is the
property of the Employee Benefits Security
Administration.
Its contents are not to be disclosed to unauthorized
persons.
File No.
Subject: (Last Name of
Complainant) v. Employer
Date
Address of Employer
By Investigator/Auditor
Approved by
EIN/PN
Status: Action
Predication
State the reasons for case opening and
for making an investigative effort. Briefly present facts
potentially relevant to timeliness under Section 413. Such
facts would include, but are not limited to, the following:
The date the case was opened;
The date on which information was received which resulted
in the opening of the investigation and a description of
that information (including source and recipient);
The date the investigation began; and
The earliest date that any information or document was
received that suggested a violation of ERISA and a
description, including source and recipient, of that
information.
Potential Jurisdictional Problems
If no jurisdictional problems are
anticipated, enter "None". If any are known, set
forth the facts to identify them and document jurisdiction
under the appropriate section of ERISA. Any issue or
potential defense relating to whether the plan is covered
under ERISA should be set forth in this section.
Background
Briefly cite the facts that will
establish the following:
Type of Plan
Date and place Plan was established
Plan Sponsor
Type of benefits provided
Type of administration
If jointly administered, name the participating union(s)
Number of Participants - active/retired
Plan Assets - Gross
Include other background facts as
appropriate such as, private litigation and bankruptcy
proceedings.
Bonding; Reporting And Disclosure;
And Fiduciary Liability Insurance
Briefly cite the facts that will
establish that the bonding and reporting and disclosure
requirements have been met, or cite the violations uncovered
and the corrective actions taken.
If the fiduciaries do not have
fiduciary liability insurance, state that fact. If the
fiduciaries have fiduciary liability insurance cite the name
of the company, effective date of the policy, and amount of
the policy. If, because of the nature of the fiduciary
breach, more than one company had the fiduciary liability
contract, cite the relevant companies, effective dates, and
amount of policies.
Plan Administration And Financial
Operation
Where appropriate this section of the
report should include, but not be limited to, information
concerning: identities and principal duties of all plan
officials and principal employees and service providers
during the relevant period, including dates of service;
funding method; internal controls; investment policies and
practices; benefit payment procedures; collection of
contributions; and other relevant information relating to
plan administration and financial operation.
Request For Variances And Exemptions
Include under this heading any variances
or exemptions that have been requested, and the decision, if
any, by OED, or present the status of the request.
Use the heading "The
Issue/Alleged Violation of Section(s) ______________."
Present all the facts from which a conclusion(s) can be
drawn that the pertinent section(s) of Part 4 was violated
(support with exhibits). In the first paragraph(s) under
this heading, set forth facts, which establish whether at
least one violator was a fiduciary within the meaning of
section 3(21) of ERISA at the time of the occurrence of the
fiduciary breach.
In subsequent paragraphs, set fopth the
facts to establish the breach of fiduciary responsibilities.
In the next paragraph(s) present facts
necessary to show timeliness under section 413.
In the next paragraph(s), in situations
where efforts were made to obtain voluntary compliance,
indicate the results of such efforts. Include copies of any
correspondence or RIs of conferences with plan officials as
exhibits.
In the final paragraph(s) set forth the
position of the fiduciary and any other involved party on
the possible violation.
Describe the next issue, and alleged
ERISA violation, in the format set forth above.
Other Findings
This heading can be used to present facts
or any other investigative activity not previously
mentioned.
Exhibits
All significant facts presented in the
report should be supported with exhibit citations. The
following procedures should be used in submitting exhibits.
State the name of the individual who is
the subject of an RI, signed statement or sworn administrative
testimony and the date of the interview or testimony.
Documents, schedules, etc., should be
complete and precisely identified.
Each supporting document should be the
final version of the document under which the parties are
operating at the time of the alleged breach.
Each supporting document should be a
separate exhibit.
Multiple page exhibits should be
numbered.
Exhibits should be identified by number.
All copies must be legible.
All plan documents (trust agreement,
etc.), relevant minutes of meetings of plan fiduciaries,
canceled checks, contracts/agreements, or any other supporting
documents pertaining to the transaction(s) at issue, third-party
corroborating interviews and/or records, and expert opinions,
if any, must be included as exhibits.
Fiduciary liability insurance policy(s)
held on the date(s) of the alleged violation(s) and/or at any
time subsequent to that date should be included as exhibits.
Attempts should be made to determine if the policies are/were
in force.
Copies of all annual reports, with
attachments, which have been filed by the subject plan
subsequent to the transaction or action at issue, must be
included as exhibits.
List of documents and workpapers
available in RO but not used as exhibits
List documents, schedules, RIs etc., in the
RO file that were not included as exhibits. Identify all
applicable dates of such documents (e.g., date prepared, date
received, etc.).
Format For Regional Directors Cover
Memorandum To An Action Report
Memorandum For:
____________________
Office of the Solicitor
(Regional Solicitor or PBSD, as appropriate)
From:
____________________
Regional Director
XYZ Regional Office
Subject:
Name and Address of Plan/Related
Entity(2)(3)
EIN/PN ____________________
And/or ____________________
Introduction: Identify the RO/DO
which conducted the investigation, the plan and plan sponsor
name(s), and the related entity, if applicable.
Briefly describe the issues and the total
apparent losses involved.
Background: Briefly describe the
plan(s) and/or related entities involved, including type,
nature of benefits/services provided, type of administration,
number of participants/plans serviced, and amount of plan
assets.
Facts/Violations: Briefly summarize
the essential facts demonstrating each violation. For each
issue discuss ERISA section(s) violated, and explain the basis
for any loss computation.
Statute of Limitations: Discuss the
statute of limitations date applicable to each issue
identifying the earliest applicable date(s).
Position of the Fiduciaries/Related
Parties: Discuss the position of the fiduciaries and/or other
parties on each issue, if known. If unknown, state the
reason(s) why the RO was unable to obtain this information
(e.g., parties' refusal to be interviewed).
Financial Condition of the
Fiduciaries/Related Parties: Discuss the financial
condition of the fiduciaries and/or related parties, if known.
If unknown, state the steps taken by the RO to obtain this
information. Also state whether the fiduciaries have fiduciary
liability insurance.
Issues Resolved Through Voluntary
Compliance: Briefly discuss any issue(s) resolved through
voluntary compliance, including any 502(l) implications.
Parallel Investigations: Note any
parallel criminal investigations being conducted involving the
subject plan and/or its fiduciaries.
Recommendations: Discuss the
appropriate remedies, for each violation identified, including
but not limited to restitution, rescission of prohibited
transactions, removal of fiduciaries, appointment of a
receiver, disgorgement, indemnification of the plan against
future losses, injunctions against future service to ERISA
plans, imposition of 502(i) and 502(l) penalties as
applicable, etc.
If voluntary compliance
was attempted and some issues, but not all, were fully
resolved, the last section of the Issues and Findings
section of the Action ROI should set forth the issues on
which voluntary compliance was achieved. No exhibits
substantiating these corrected violations are required.
Example: "Issues resolved include (1) the selling of
plan property without obtaining an appraisal to determine
FMV, (2) the plan's incurring unreasonable and unnecessary
trustee expenses, and (3) the failing to follow governing
plan documents in making participant loans." The
content of this section should be confined as much as
possible to factual statements.
Footnote (as
applicable): This memorandum and the Action ROI on page(s)____
, and exhibits ____ contain IRC 6103 information and
should be handled accordingly.
Footnote (as
applicable): This case presents possible reporting
deficiencies and/or blackout deficiencies for which ERISA
section 502(c)(2) and/or 502(c)(7) civil penalties may be
imposed by OCA and which have been referred to OCA.
This case presents possible IQPA deficiencies referred to
OCA.