ERISA Welfare Benefit Plan Audit Procedure and Questions

Transcription

1 ERISA Welfare Benefit Plan Audit Procedure and Questions I. Summary a. Conduct a review of all documents associated with the ERISA welfare benefit plans offer by your company. b. Identify all relevant documents and compile them in one place (a data room) c. Analyze for compliance with current laws be mindful of inconsistencies among the documents. d. Determine steps required to update the plans, as needed. II. Sample Questions to Consider a. Qualified Retirement Plans i. Do you have a written plan and trust document? Under the Employee Retirement Income Security Act of 1974 ("ERISA"), all benefit plans MUST be in writing. Do you have a signed funding policy? Pursuant to ERISA, a plan must adopt a funding policy that outlines certain fiduciary standards that should be adhered to when making plan investments. Please contact us if you would like our assistance in drafting such a policy. i Are there appropriate compliance amendments for the plan? If you have not added the appropriate compliance amendments to your plan within the statutory time frame, you may have to utilize the Employee Plans Compliance Resolution System in order to avoid plan disqualification. iv. Do you have a favorable IRS determination letter? 1

2 Without a favorable IRS determination letter, your plan may not receive the tax benefits of qualified plans. v. Do you have a summary plan description (SPD)? ERISA requires that you provide an SPD to all participants. The SPD must be written in a clear, and understandable form. vi. Have you distributed the SPD to plan participants? v Do you have any Summaries of Material Modification (SMM)? vi Have you annually filed a Form 5500? If you have not annually filed a Form 5500 you may be assessed fines and penalties by the IRS and the Department of Labor ( DOL ). Delinquent forms 5500 may be corrected under the DOL s correction program. ix. Do you have administrative forms and procedures in place regarding the plan? An important part of the administration of a plan is to properly document plan transactions including loans, distributions, and beneficiary designations. It is also important to maintain and follow written procedures when administering the plan. Please contact us if you would like our assistance in this regard. x. Do you know when the plan's remedial amendment period expires? Individually designed plans have a five-year rolling remedial amendment period based on the last digit of the sponsoring employer's EIN. Volume submitter and prototype plan adopters 2

3 have a six-year remedial amendment period. Please provide a copy of the plan document and a copy of the last form 5500 filed for the plan if you would like us to determine the applicable remedial amendment period. xi. Is proper bonding in place for those individuals who handle plan funds? b. Welfare Plans Generally, every plan official of an employee benefit plan who "handles" funds or other property of such plan must be bonded. A person shall be deemed to be "handling" funds or other property of a plan, so as to require bonding, whenever his or her other duties or activities with respect to given funds are such that there is a risk that such funds could be lost in the event of fraud or dishonesty on the part of such person, acting either alone or in collusion with others. Please contact us if you would like our assistance in obtaining the correct bonding for the plan. i. Do you have a written plan document? Under ERISA, all benefit plans MUST be in writing. Do you have a summary plan description (SPD)? ERISA requires that you provide an SPD to all participants. The SPD must be written in a clear, and understandable form. i Have you distributed the SPD to plan participants? ERISA requires that you provide a summary plan description to all participants. The SPD must be written in a clear, and understandable form. iv. Does the SPD contain the appropriate COBRA & HIPAA disclosures? All plans subject to COBRA and HIPAA must make proper disclosures to plan participants. 3

4 v. Do you have any Summary of Material Modifications (SMM)? vi. Have you annually filed a Form 5500 (if you have over 100 participants and your plan is funded)? If you have not annually filed a Form 5500, you may be assessed fines and penalties by the IRS and the Department of Labor. Delinquent forms 5500 may be corrected under the DOL's correction program. v Do you have administrative forms and procedures in place regarding the welfare plan? An important part of the administration of a plan is to properly document plan transactions, including benefit elections, claim forms and the like. It is also important to maintain and follow written procedures when administering the plan. Please contact us if you would like our assistance in this regard. vi Do you have the requisite HIPAA forms? ix. Do you have the requisite COBRA forms? x. Have you addressed PPACA issues? c. Non-Qualified Deferred Compensation Plans i. Do you have a written plan document? 4

5 Do you undertake informal plan funding? i Have you complied with the Department of Labor filing requirements (i.e., the 120 day letter)? iv. Has the plan been reviewed for Internal Revenue Code section 409A compliance? Non-Qualified Deferred Compensation Plans are subject to strict IRS regulations. All Non-Qualified Deferred Compensation Plans must be amended to comply with Internal Revenue Code section 409A by December 31, d. Controlled Groups/Affiliated Groups/Unrelated Entities i. Do you have an ownership interest in or a management arrangement with any other businesses? A controlled group relationship may exist. If you would like us to determine if a controlled group exists and its effect on your benefit programs, please provide exact ownership interests - all entities and the relationship of any owners. Do any unrelated employers participate in your retirement plans? This may result in a multiple employer plan. If you would like our assistance in determining whether a multiple employer arrangement exists and its effect on your benefit program, please contact us. i Are there any employee leasing arrangements? 5

6 Please provide copies of any leasing agreements if you would like us to determine how the leasing arrangement affects the benefits provided to the leased employees. 6