Making Sense of Audits

How advisers can help their clients through DOL audits, with recordkeeper help
Cheryl Steinert and Jon Prescott

The retirement plan audit is, for most plans, an annual occurrence, but it can still strike fear into the hearts of many—especially those selected for a random audit. It is also a process during which plan sponsors look for help from their retirement plan advisers. However, the process does not have to be frightening, as CPI Qualified Plan Consultants’ Jon Prescott, vice president of relationship management and strategic initiatives, and Cheryl Steinert, senior manager of recordkeeping services, recently told Alison Cooke Mintzer, editor-in-chief of PLANADVISER.

PA: What kind of audits are retirement plans subject to?

Steinert: There are several. If the plan has 100 or more participants at the beginning of the year, there is an audit that is required to be attached to the Form 5500 that we call the compliance audit for the 5500. Another would be a random audit, for which the plan would be selected by the Department of Labor (DOL) or the Internal Revenue Service (IRS).

Prescott: Depending on how the Form 5500 is filed, the Department of Labor could contact the plan sponsor directly and say, “You’ve been identified for a random audit,” which is unnerving for many plan sponsors.

Some service providers file the Form 5500 for the plan sponsor in the name of the service provider, so the DOL notifies the provider that the plan has been identified for a random plan audit. Then the service provider is in a position to soften that blow to the plan sponsor and work with the sponsor to help them through this.

At CPI, we help our plan sponsors with random audits. Clients sign a Form 2848 so that we can talk to the DOL about their plan and help with that audit process. It’s important that the plan sponsor partners with a service provider that will more than willingly step forward and help them through this audit process.

Steinert: There have been some changes over the last couple of years: We’ll prepare the 5500 for the client, and then they sign off on it, but the clients have to obtain their credentials, sign the 5500, and then send it in themselves. We do help them as much as possible, but everything is going to electronic filing. We do help the client with the process of obtaining those credentials.

We’ve had an 800-number available for those clients that are getting close to their filing deadline and haven’t gotten their credentials. Maybe they can’t figure out how to answer their questions or how to complete the submission. They can call us, and we’ll help them with any questions they might have—and you know we’ve gotten those calls at the 11th hour.

Prescott: It’s important that the adviser understands that since they’re the front-line adviser on every plan, they need to help their plan sponsor to partner with a service provider that helps in the audit process when necessary—both the compliance audit on the Form 5500, and also if their client is chosen randomly by the Department of Labor. It’s important that the adviser ensures clients are working with a service provider that offers this kind of support.