Audit Communications and DOL Update November 19, 2014 By: Stan - - PowerPoint PPT Presentation

Audit Communications and DOL Update

November 19, 2014 By: Stan Bowles, CPA

Bio

• Partner with Brown, Edwards & Company, LLP
• Tax, healthcare, consulting and EBP services
• 20 years of experience
• BE is the 124th largest US firm out of 330,000
• 7 office locations and 200 employees
• Firm is a member of the AICPA EBPAQC
• Firm performs over 100 EBP audits per year
• Firm also provides TPA services and assists with

plan designs and documents

Discussion Topics

• Role of regulators (DOL and IRS)
• Plan sponsor responsibilities
• Employee benefit plan examination process
• Plan sponsor compliance and preparation
• Correcting plan errors
• Hot topics
• Questions

Roles of Regulators

• IRS has primary jurisdiction over qualified plans,

which includes examining plans and processing requests for determination letters.

• Department of Labor (DOL) has primary

jurisdiction over the fiduciary standards, reporting and disclosure requirements and other rules.

Plan Sponsor Responsibilities

Keeping the plan in compliance:

• Plan document written to comply with all

requirements of the IRC.

• Plan administered to follow the terms in
• peration.
• Review the plan annually to make sure it’s
• perating according to its terms and the law.

Examination Process

• Very structured process
• The IRS even provides a flow chart of the

process!

Examination Process

Key focus areas include:

• 1. Eligibility, participation and coverage
• 2. Vesting
• 3. Discrimination
• 4. Top heavy requirements
• 5. Contributions and benefit limits

Examination Process

• 6. Funding and deductions
• 7. Distributions
• 8. Trust activities
• 9. Plan and trust documents

10.Returns and reports

Compliance & Preparation

Top 10 tips to prepare for an efficient audit

• 1. Have readily available:

 Plan documents, including amendments, SPD, etc.  Opinion letters/determination letters  Requested records efficiently organized  Agreements with service providers

• 2. Have appropriate people available

 Trustee, custodian, attorney, etc.

• 3. Be prepared to explain terms of the plan

Compliance & Preparation

Top 10 tips to prepare for an efficient audit

• 4. Be prepared to explain operation of the plan

 Administrative forms (deferral agreements, etc.)  Loan and hardship documentation

• 5. Be prepared to provide all applicable test

results

• 6. Be prepared to explain internal administrative

processes

 Practices and procedures (payroll, remittances)  Internal controls

Compliance & Preparation

Top 10 tips to prepare for an efficient audit

• 7. Be prepared to identify plan errors
• 8. Be prepared to provide information about

related employers/entities

• 9. Consider utilizing annual self-audit as a

verification tool (small plans not subject to audit) 10.Consider utilizing available IRS resources

Compliance & Preparation

So how can I keep up with compliance and be prepared?

• IRS 401(k) plan checklist (other plan types also

available)

• 401(k) Plan Sponsor fiduciary audit file checklist

(RBC Wealth Management as an example)

Correcting Plan Errors

The Employee Plans Compliance Resolution System (EPCRS) provides for 3 types of programs for correcting plan errors:

• 1. Self-correction program (late deferral payment

remittance corrected with form 5330)

• 2. Voluntary correction program (failure to get

plan audited and not yet notified by IRS of audit requirement)

• 3. Audit closing agreement program (errors fixed

as result of IRS or DOL audit)

Hot Topics

• Plan amendment requirement for same sex

marriages – Windsor case – amendments required by 12/31/14 if the plan defines spouse as member of opposite sex and/or the plan wishes to refer to the outcome of Windsor case

• Disclosure of plan fees – applicable for 2013
• 2015 changes – Eligible comp increased to

$265,000; deferrals increased to $18,000; catch-up contribution (50 and older) increased to $6,000

Questions

Contact Information

Stan Bowles, CPA Partner Brown, Edwards & Company, L.L.P. P.O. Box 16999 Bristol, VA 24209-6999 Phone number: 276-466-5248 E-mail address: sbowles@becpas.com Website: www.becpas.com