What the EBSA Will Ask for in a 401(k) Plan Audit: Documentation You Need

by Keith R. McMurdy, partner, Fox Rothschild LLPkeyboard glasses audit

When clients get an audit request letter from the EBSA, they usually call me surprised at the amount of information being requested. It is not just the shock of being audited that impacts them, but the amount of information they need to provide. Sometimes, the requested documentation may not be available, which creates its own set of issues. But for planning purposes, I thought it would be beneficial to lay out the list from the most recent audit request I reviewed.

Plan sponsors of defined contribution plans will likely be required to produce the following in response to an audit:

  1. Plan documents and all amendments, including trust documents and summary plan descriptions (which reminds us these should exist and amendments should be formally written and adopted)
  2. Summary annual reports for the period under review
  3. Fiduciary insurance and bond policies
  4. Internal income and disbursement statements
  5. IRS determination letters
  6. Meeting minutes for committee or subcommittee meetings (which suggests there should be meetings regarding plan administration)
  7. Plan financial records, including account statements and ledgers
  8. Service provider contracts
  9. A sample participant benefit statement
  10. RFPs disseminated showing the process for hiring plan professionals
  11. Form 5500s
  12. All documents related to service provider fees, including fee schedules and compensation paid to professionals by the plan
  13. All documents related to costs charged to the plan
  14. Documents identifying fiduciaries, including their dates of service
  15. Any ERISA compliance policies or procedures adopted by the plan or sponsor
  16. All documents related to plan investment performance (which includes an investment policy statement)
  17. All documents related to administrative expenses (direct or indirect) related to the plan
  18. Documents showing the names and service times of board members and officers of the plan sponsor
  19. Documents showing timeliness of employer contributions and repayment of participant loans
  20. Documentation showing the procedure for handling participant loans, if applicable (because loan administration and repayment of loans is a frequent issue in audits)

As you can see from this list, there are certain documents that relate to the plan (like plan documents) and certain information related to the sponsor. Plus there is a lot of financial data that has to be provided. The time to see if you have this required information is before you receive the audit request. So consider this list as a test. If there is a request here that you could not satisfy if you were undergoing an audit, now is the time to locate that information. And if it is documentation that needs to be created, don’t hesitate to ask your attorney for assistance.

Reprinted with permission of the author. For information, please contact Keith R. McMurdy at kmcmurdy@foxrothschild.com

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