October 19, 2012
--- Following the final Department of Labor (DOL)
408(b)(2) and 404(a)(5) regulations, many providers and plan sponsors were
unprepared, but there are best practices to avoid an
Tom Loch, senior
vice president for Castle Rock Innovations, contended the DOL failed to give
clear instructions and sufficient support after passing these regulations;
interpretations coming from Employee Retirement Income Security Act (ERISA)
attorneys, DOL bulletins and the “rumor mill” left many confused. In the first
of a series of webinars hosted by Castle Rock, “Preparing your organization for
2013—Are you ready for The DOL Audit,” speakers discussed best practices for
avoiding audits relating to plan fees.
John Sohn, partner at Wagner Law Group, shared steps plan sponsors should take:
- Check to ensure providers
formalize a procedure for 408(b)(2) notices and updates. This has been a
great weapon against the DOL, Sohn said. Before, the department could go
after providers about whether compensation was reasonable or fraudulent;
now, the 408(b)(2) rule forces services providers to include a great deal
of information in all of its notices.
- Ensure providers maintain “model”
documents reflecting current law. It is risky to have something in the
agreement that suggests the provider is not taking the Employee Retirement
Income Security Act (ERISA) seriously. They should review request for
proposal (RFP) material and ensure it is updated for 404(a)(5) and
408(b)(2), qualified default investment alternative (QDIA) rules,
field assistance bulletins (FABs) and any other guidance. It is
helpful in establishing credibility and is also protective. Also check
that the provider drafted a document that cross-references policies to
regulation requirements to show that time has been taken to ensure ERISA compliance.
- Check that all client service
agreements are signed. All investigators will look at this, Sohn said.
- Make sure provider responses to
Form 5500 information requests look professional, and not something that
is done ad hoc.