Contact Us for More Information

What Would a Government Investigation Reveal About Your Retirement Plan?

Posted by Paul D. Woodard | Sep 05, 2017 | 0 Comments

Many businesses put a lot of time and effort into initially setting up company retirement plans. Unfortunately, they do not regularly revisit the plans to ensure they are staying in compliance with ERISA and federal regulations, or do not take into account governmental policy changes. A Department of Labor (DOL) investigation can uncover problems with retirement plans and subject employers to costly penalties.

The Employee Retirement Income Security Act (ERISA) gives the DOL the authority to investigate various violations. If violations are identified, the DOL can pursue corrective action through voluntary compliance, restitution, rescission of prohibited transactions, removal of fiduciaries, appointment of a receiver, and/or the imposition of penalties.

Investigations into employee benefit plans are conducted by the Employee Benefits Security Administration (EBSA). It is not uncommon for many companies to end up under investigation by EBSA at some point in time. The good news is that, in many cases, the DOL's Voluntary Fiduciary Correction Program (VFCP) can be utilized to comply with ERISA regulations and avoid costly penalties.

When a company receives notice of an EBSA investigation, they often wonder what prompted the inquiry. An investigation can be triggered by any number of reasons, including a tax audit, information provided in the plan's annual Form 5500 filing, a complaint lodged by plan participants, or even a change in policy within the agency.

For example, last year, the DOL announced they would increase enforcement to ensure plans were locating missing pension plan participants. Failing to locate missing participants or beneficiaries may be considered a breach of fiduciary duty and could expose plan sponsors to liability. As a result of the policy change, the DOL uncovered that many larger defined benefit plans have inadequate procedures in place for locating missing plan participants.

There are a number of steps employers can take before they are given notice of any investigation to reduce the risk of penalties. First and foremost, proper documentation can go a long way to reducing the risk of violations. Proper documentation includes making note of the reason a fiduciary makes a decision on behalf of the plan participants to show they were acting in their best interests. This includes considering plan expenses in light of the services provided and making sure there are no perceived conflicts of interest between a fiduciary and service provider.

Second, plan administrators should regularly review plan documents to make sure they are adhering to the plan procedures, and documenting the steps taken in compliance with the plan. For example, if the plan document requires that employee deferrals be deposited within a certain time period, the plan administrator must ensure the deposits are being timely made.

Third, employers and plan administrators should listen to the plan participants themselves when they point out issues they are experiencing with the retirement plan. This includes trouble accessing benefits, incorrect account balances, or delays in making deposits. The plan participant may bring to light possible violations that allow the plan provider to fix the issue before the DOL takes notice.

Whenever there is any doubt about a plan procedure or whether an action could violate ERISA requirements, the plan administrator or employer should consider contacting their ERISA lawyers for guidance. ERISA regulations, DOL policies, and case law are always changing and it can be difficult for employers or plan administrators to keep up to date. Your ERISA attorneys can help you review your policies and ensure you are in compliance if EBSA investigates your retirement plan.

If you have any questions about DOL investigations or making sure your retirement plan is ERISA compliant, the law firm of Butterfield Schechter LLP is here to help. We are San Diego County's largest law firm focusing its law practice on employee benefits law. Contact our office today with any questions on how we can help you and your business succeed.

About the Author

Paul D. Woodard

Paul Woodard practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Estate Planning.


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.


We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.


A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

Butterfield Schechter LLP provides the information in this website as a service to its clients and visitors to the site. This website is for information purposes only and is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The information in this website is provided "as is," and while the information in this website is updated periodically, additional facts or future developments may affect subjects contained herein, and no guarantee is given that the information provided is correct, complete, or up-to-date. Seek the advice of professional counsel before acting or relying upon any article, form, or information in this web site. To ensure compliance with the requirements imposed by the United States Treasury and the Internal Revenue Service, we inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of: (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another person any transaction or matter addressed herein. Butterfield Schechter LLP has endeavored to comply with all known legal and ethical requirements in compiling this website. In the event that this communication does not conform with any laws or regulations of any state or country in which it may be received, Butterfield Schechter LLP will not accept legal representation based on this communication from a person in such a state or country. Electronic mail is provided as a convenience in communicating with the attorneys at Butterfield Schechter LLP. Contact by e-mail does not alone create an attorney-client relationship. Please remember Internet e-mail is not secure and messages sent to the firm or any of its employees or attorneys should not contain sensitive or confidential information. Thank you for visiting our site.