What To Expect From An Employee Benefits Security Administration (EBSA) Investigation

Transcription

1 What To Expect From An Employee Benefits Security Administration (EBSA) Investigation October 23, 2018 Senior Practice Fellow: Lois La Londe, Supervisory Benefits Advisor, US Department of Labor Guest Lecturer: Michelle Khalife, JD, Senior Investigator, US Department of Labor

2 RCA Mission & Community Exclusive Global Authority for Compliance Continuing Education (CCE ); Talent Assessment & Development; Professional Exams; Executive Degree Programs. RCA Global Metrics Supporting over 80,000: Individuals in Career Transition Veterans Single Parents Regulators Financial Execs Professionals Jobseekers Millennials NORTH AMERICA EUROPE ASIA AFRICA SOUTH AMERICA AUSTRALIA Recognized by over 30,000 senior level Regulators, Lawyers, CPAs, Investors and Financial Institution Executives 2

3 RCA Mandate Invest in Your Future Position Yourself for Success TM Core Verticals Compliance Continuing Education Professional Exams & Certifications Executive Masters Degree Programs Talent Assessment and Development Recognized & Used by over 30,000 Regulators, Institutional Investors, Compliance Officers, Legal & Operations Executives Governing, Regulating & Administrating the Professional Examination of Regulatory Counsel, Regulatory Analysts & Compliance Officers. Executive MS (Master of Science) in Compliance Executive LLM (Master of Law) in Regulation Certifying Regulators RTAC Assessment of Compliance Knowledge & Skills RTEDS - Talent Management and Development 3

4 RCA CCE Accreditation Refined Over 20 Years RCA s CCE (Continuing Compliance Education) Accreditation requires all course materials to satisfy graduate level criteria within each phase of the academic process: Curriculum Development, Instructional Design & Peer Review. RCA CCE Accreditation Curriculum Development Instructional Design Peer Review Accreditation Independent assessments of course subject matter. Faculty drafted syllabus & corresponding outline. Faculty prepared course materials. Proprietary work product (forms, policies/procedures, contractual language, etc.) Course Materials (Textbook, Instructional Aides, etc.) Lectures Examinations Syllabus and detailed outline Entire course offering Mandatory annual review and accreditation of Course Materials. CPE (Continuing Professional Education). CLE (Continuing Legal Education). CCE (Continuing Compliance Education ) RCA, , All rights reserved 4

5 Firms Using RCA Accredited CCE 5

6 Regulators & Industry Executives Using CCE 6

7 RCA for Employers Exclusive Global Authority for Compliance Continuing Education (CCE ); Talent Assessment & Development; Professional Exams; Executive Degree Programs. Optimize Your Firm RTAC RCA s Talent Assessment Center RTEDS RCA s Talent Enhancement & Development System REIS RCA s Regulatory Exam Interview System RTAC + RTEDS + REIS = RCA Validated Talent Optimization 7

8 RCA Talent Assessment Center (RTAC) Fortify Your Firms Human Capital Its Greatest Asset TM 8

9 RCA Talent Enhancement and Development System (RTEDS) Fortifying Human Capital Your Firms Greatest Asset TM Regulation 33 & 34 Act IA Act 1940 IC Act of 1940 Crypto Currencies Digital Assets CTA Regulation CPO Regulation AIFMD UCITS MiFIDs EMIR DOL / ERISA AML / KYC Trading & Markets Insider Trading Market Manipulation Systemic Risk Political Contributions Whistleblower FCPA Anti-Bribery Sanctions Anti Trust HSR Compliance Process Surveillance Supervision Analytics Case Management Risk Assessments Forensic Testing Reviews Remediation Reporting Marketing Disclosure Practices Client/Customer/IR Fiduciary Duty AML Social Media Code of Ethics Trading & Markets Conflicts Exams & Enforcement Inspections Examinations Enforcement Civil Discovery Civil Litigation Investigatory Practice Criminal Prosecution Law & Practice Law Practice Operational Process Cybersecurity Due Dilligence Risk Management Fund Goverance Valuation Accounting Taxation FACTA BEPS 9

10 Automated Regulatory Examination Interview System (REIS ) SEC Examiners NOW interview your personnel to find deficiencies in their core competencies and skill sets. RCA s Examination Interview System (REIS) simulates the interview process to identify and resolve knowledge gaps by assigning accredited, up-to-date, relevant, targeted, talent development. Design & Deploy Configures mock exam interviews by subject or topic for a division, department, group or particular employee. The cloud-based system simulates the interview process with a database of over 15,000 queries spanning 4500 topics using a selfpaced environment. Automatically identifies, assesses and evaluates each employee s gaps in core competencies skill sets and knowledge. 10

11 RCA for Career Advancement Invest in Your Future Position Yourself for Success TM Compliance Continuing Education Professional Exams and Certifications Executive Degree Programs RCA Symposia Timely, Relevant Commentary Comprehensive, Up-to-Date, Practice Guides Over 800 Topics CRC (Chartered Regulatory Council) CRA (Chartered Regulatory Analyst) Surpass JD & MBA Graduates Executive MS (Master of Science) in Compliance Executive LLM (Master of Law) in Regulation Accredited, Authoritative Faculty Network with Industry Leaders and Senior Regulators 11

12 Regulatory Leaders Endorse RCA 12

13 Regulatory Leaders Endorse RCA 13

14 Industry Leaders Endorse RCA 14

15 Assistant Secretary Deputy Assistant Secretary for Program Operations Deputy Assistant Secretary for Policy Office of Exemption Determinations Office of Health Plan Standards and Compliance Assistance Office of Enforcement Office of Regulations and Interpretations Office of Policy and Research Office of the Chief Accountant Office of Technology and Information Services Office of Outreach, Education and Assistance Regional Offices Office of Program Planning Evaluation and Management Boston Philadelphia Cincinnati Kansas City Los Angeles New York Atlanta Chicago Dallas San Francisco 15

16 Regional Offices District Offices 16 16

17 FIELD OFFICES 10 REGIONAL OFFICES CONDUCT INVESTIGATIONS PROVIDE COMPLIANCE ASSISTANCE 17

18 The Employee Benefits Security Administration protects the security of the retirement, health and other workplace related benefits of American workers and their families. Our Agency accomplishes this by: developing effective regulations assisting and educating workers, plan sponsors, fiduciaries and service providers vigorously enforcing the law 18

19 Strategic Enforcement Plan (STEP) Describes basic enforcement strategy Last published in 2000 Program Operating Plan (POP Guidance) Changes annually Each Regional Office creates its own POP 19

20 Contributory Plan Criminal Project (CPCP) Protecting Benefits Distribution (PBD) Project Plan Investment Conflicts (PIC) Project Employee Stock Ownership Plans (ESOPs) Health Enforcement Initiatives Project 20

21 Participant Complaints Other Form 5500 Reviews Media Referrals from other agencies 21

22 Civil Plan Service Provider Criminal Plan Service Provider Employer Individual 22

23 Review of Plan Assets Prudence, Prohibited Transactions, Self Dealing Reporting and Disclosure Bonding General Plan Operations In Accordance with Plan Document Remittance of Employee Contributions 23

24 Start with phone call from Investigator / Auditor Followed by confirmation letter Date & time of visit Plan(s) to be reviewed Records/documents needed Varies depending on issue 24

25 Interviews with key personnel and plan fiduciaries Basic operations / services Contributions Benefit payments Expenses Investments Identification of Service providers Record-keeper(s) 25

26 26

27 Plan Document / Trust Agreement SPD Form 5500 filings (past 3 years) SAR for last year Fidelity Bond Fiduciary Insurance Policy Trustee Statements (past 3 years) (asset records) Service Provider Contracts Meeting Minutes Benefit Statements Asset records Payroll / contribution records 27

28 Reporting Requirements Annual Report (Form 5500) Affordable Care Act New Health Care Provisions Genetic Information Nondiscrimination Act (GINA) Mental Health Parity and Addiction Equity Act 28

29 Summary Plan Descriptions (SPDs) Summary of Material Modifications (SMM) Summary Annual Reports (SARs) Blackout Notices COBRA Notices / HIPAA Certificates & more Provide documents on request Participant Benefit Statements Field Assistance Bulletin Field Assistance Bulletin

30 10% of Funds Handled not less than $1,000 nor more than $500,000 ($1,000,000 for plans with employer securities) No deductible Plan should be named as insured Discovery Period of no less than one year after termination Or cancellation of bond is required See FAB

31 Act solely in interest of Ps & Bs Discharge his / her / its duties prudently (care, skill, prudence and diligence) Diversify plan investments Follow terms of governing document (to the extent consistent with ERISA) 31

32 Act in his / her / its own self interest Act on behalf of a party with adverse interests Accept gratuity from those doing business with the Plan (kickback) 32

33 Fiduciaries must NOT cause the Plan to engage in a prohibited transaction Sale / exchange with party in interest (PII) Loan / extension of credit with PII Goods, services & facilities with PII Transfer to, use by or for the benefit of a PII 33

34 Handling of employee contributions Basic Rule As soon as they can be reasonably segregated from Employer s general assets Safe Harbor Reg. 1/14/2010 for plans with fewer than 100 participants As soon as varies from plan to plan Will ask question about handling Will review practice / experience Outside Limits (Not a safe harbor) Pension 15 Business Days after end of month of withholding / receipt <<SIMPLE IREA Plans 30 days after end of month>> Welfare 90 days after withholding / receipt 34

35 Depends on any problems identified If no problems are noted, closing letter If problems are noted, corrective actions are necessary 35

36 SAMPLE TEXT Usually, EBSA will send Notice Letter Identifies problems Offers chance to discuss correction EBSA encourages Voluntary Compliance Proper Correction >> Closing Letter Identifies problems & corrective actions No Correction >> referral to the Solicitor s Office 36

37 SAMPLE TEXT Depending upon the circumstances, EBSA may seek Correction of prohibited transactions Restoration of losses Penalties Removal of fiduciaries Removal of service providers Appointment of independent fiduciary Implementation of new internal controls Supplemental distributions to Ps & Bs Final accounting 37

38 IRS Coordination Agreement and Statute requires Referral of prohibited transactions to IRS Referral of potential issues affecting tax qualified status IRC 4975 excise tax (tax qualified pension plans) Competency proficiency Management Nomination Scope of operation Leadership results 38

39 Under some circumstances, criminal referrals may be made Theft / embezzlement Kickbacks / bribes False statements to investigators Willful failures to file / false filings Health care fraud 39

40 40

41 Allows Plan Officials to correct certain violations before DOL investigates and if done properly, receive a No-Action letter from the Department. You fixed it 41

42 Designed to be a voluntary program No need to consult with EBSA Apply after correction 42

43 Compliance with ERISA Guidance regarding correction Restoration of losses Increased benefits for some Ps & Bs Enhanced benefit security More accurate valuations & reporting 43

44 No Action letter (upon completion) Avoid DOL investigations Avoid ERISA 502(l) penalty 20% penalty on settlement agreements Avoid potential litigation In some cases, avoid IRC 4975 excise tax Demonstrate Social Performance to external stakeholders 44

45 Fiduciaries 45

46 Identify potential ERISA violations Determine VFCP eligibility Correct violations File an application with Regional Office 46

47 Not all fiduciary violations are included Must be 1 of 19 described transactions 47

48 Neither plan nor applicant Under Investigation No evidence of criminal violations EBSA has not referred the transaction to the IRS; EBSA notified plan official of referral 48

49 All losses must be restored to plan, all PTs corrected Principal Interest 5500s amended when appropriate Correction Supplemental distributions must be made (when appropriate) No correction costs paid by plan 49

50 Narrative Describe parties involved, explain breach & correction & how earliest reasonable date was determined in delinquent EE contributions apps. Supporting documentation Relevant parts of plan, loan documents, FMV determinations Penalty of Perjury Statement Checklist Proof of Payment Model Application Form Not required, but recommended Helps ensure a complete & accurate application Includes Required Documents Documents Penalty of Perjury statement Checklist Penalty of Perjury Statement Checklist 50

51 Delinquent Contributions/Loan Contributions to Pension Plans Loans to Fair Market Rates Purchases/Sales FMV Sale/Leaseback to Employer FMV Illiquid Assets Settlor fees paid to a Service Provider Notice Requirement Notice Exception Delinquent employee contributions/loan repayments Excise tax <= $100 Excise tax which would otherwise be payable to IRS is paid to plan Distributed to participants as earnings would be Do not have to file IRS Form

52 Office of Regulations & Interpretations: Advisory Opinion Letters, Regulations, Technical Rulings Office of Exemption Determinations: Exemptions from Prohibited Transaction Rules Class & Individual basis Office of Chief Accountant: Reporting & Disclosure issues Office of Health Plan Standards & Compliance Assistance: HIPAA & other group health laws 52

53 EBSA web site: EFAST web site: Publications: Technical Assistance (Toll-free number): EFAST Hotline (Toll-free number): (Go EFAST) Regional Offices:

54 Meeting Your Fiduciary Responsibilities Understanding Retirement Plan Fees and Expenses Selecting an Auditor for Your Employee Benefit Plan Reporting and Disclosure Guide Selecting & Monitoring Pension Consultants Tips for Plan Fiduciaries Tips for Selecting and Monitoring Service Providers for Your Employee Benefit Plan 54

55 Subscribe to the EBSA website for receive alerts on new guidance and events

56 Lois La Londe, JD, Supervisory Benefits Advisor, US Department of Labor, Employee Benefits Security Administration Lois La Londe is the Supervisory Benefits Advisor for the U.S. Department of Labor Employee Benefits Security Administration s ( EBSA ) New York Regional Office. She is responsible for managing the Benefits Advisor unit which provides participant and compliance assistance to the public. Ms. La Londe began her career with EBSA as a Benefits Advisor in May 2009 and then became an Investigator in March As an investigator, Ms. La Londe conducted civil investigations of pension plans, health plans and service providers to determine compliance with Title I of ERISA. She was promoted to Senior Investigator in 2016 and recently became the Supervisory Benefits Advisor in January Ms. La Londe has done two details with the Department s National Office as a Special Assistant to the Deputy Assistant Secretary for Program Operations and an Assistant to the Major Case Coordinator in the Office of Enforcement. Prior to coming to EBSA, Ms. La Londe obtained a Juris Doctor degree from Brooklyn Law School. 56

57 Michelle Khalife, JD, Senior Investigator, US Department of Labor Michelle Khalife has been working with the Department of Labor since She began her career with EBSA as a Benefits Advisor where she provided information to plan participants and compliance assistance to plan fiduciaries. In 2012, she transferred to the Enforcement Division as an Investigator where she conducts civil and criminal investigations of pension plans, health plans and service providers to determine compliance with Title I of ERISA and other related laws. In 2017, Ms. Khalife was promoted to Senior Investigator and is responsible for conducting and coordinating complex major cases for the New York Regional Office. Ms. Khalife received her J.D. from St. John s University and a Bachelor of Arts from Villanova University. 57

58 RCA, , All rights reserved 58