Department of Labor 401k Audit: Are You Ready?

A Department of Labor 401k audit can be triggered by an employee complaint or even information you’ve submitted in your retirement plan’s annual Form 5500 filing.

Often times a Department of Labor (DOL) audit is a random event, which is why you should always be prepared!

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Listed below are several key items typically requested in an initial letter sent by the IRS or the Department of Labor in connection with a 401k plan audit.  These items should be readily accessible by the plan administrator at all times the plan is in operation.

• 401k Plan document and all Amendments
• Summary plan description
• Investment policy statement
• Copy of the most recent IRS determination letter
• Copies of Forms 5500 and 5500-C
• Plan’s correspondence files (including meeting minutes)
• Plan’s investment analyses
• ADP and ACP testing results
• Most recent account statements for participants and beneficiaries
• Contribution summary reports (i.e., evidence of receipt of these monies by the plan’s trust)
• Loan application, amortization/repayment schedule (for all loans)

Many times a plan sponsor will neglet to have signed copies of plan documents on file.

If you cannot produce a signed plan amendment, the DOL will assume that the amendment was never in effect, thereby exposing you to potential penalties and fines.

If you have questions about how to organize your 401(k) plan documents, prepare for an Department of Labor (DOL) audit, or if you need 401k plan design review assistance, please contact us at 415-677-9300.

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