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Can Your Customers Pass an ERISA Audit?

April 13, 2015

By Scott Lyon, Senior Vice President

The best way to pass an audit is to avoid an investigation from the Employee Benefits Security Administration (EBSA) in the first place – and the best way to do that is to make certain that your documents are up to speed.  As I have mentioned in past articles, in 2013 the Department of Labor (DOL) hired an additional 1,000 investigators to conduct audits and generally enforce ERISA rules and regulations.  Let’s not give them an entry to your clients.

Chances are pretty good that if an audit is conducted, the EBSA is going to find something.  In 2014 they handed out a total of $832 million in fines, of which $600 million went back to plan participants.   Presumably, the other $232 million stuck at EBSA to fund operations, including additional audits.  Nowhere in these figures is the cost to business of producing and providing documents, hiring professional help, either in the form of a CPA, ERISA attorney or your time as a benefits professional.  Not to mention taking your client’s time away from running their business and attending to their customers.  

Making certain that your clients are doing things right in the first place is smart business for you as their agent.  Chances are, your number is the first one dialed if the EBSA calls on your customer.  Is it your responsibility to make sure that your customer’s ERISA documentation is up to speed?  Technically, no it is not.  That said, will your customer agree with that statement?  If you have not prepared your customer in advance, will your customer buy your answer that it is their responsibility and not yours? Do you want to take this chance?

With thousands of investigators running around, it is more likely than ever that one of your customers will be audited and chances are pretty good that if they are audited, given the complexity of plan administration and reporting, something will turn up that needs to be corrected.  Finding and fixing these errors before an audit will go a long way in managing the chances and the outcome of an audit.  It is good business to alert your customers to the potential of an audit and tell them to take this seriously, review their plans and correct errors.

SBAM can help.  We have a brand new service that is designed to help you be a hero and keep your customers out of trouble.  Our ERISA and ACA Compliance Services are designed with the small business owner in mind.  From preparing a Summary Plan Description to a full blown pre-audit review of your customers’ compliance documentation related to ERISA and the ACA, we can help.  Click here for additional information, or give us a call at 800.362.5461.

Webinar on May 12th @ 2 pm – Stay Tuned for Details
SBAM will explain how we can help you and your customers through our new ERISA and ACA Compliance Services.  Registration details will be included in our next Agent Alert.  

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