CASE OF THE WEEK – Fiduciary Investigation Guidelines

By Jenny Kiffmeyer, J.D – The Retirement Learning Center

Fiduciary Investigation Guidelines

ERISA consultants at the Retirement Learning Center (RLC) Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.

A recent call with a financial advisor from Ohio is representative of a common inquiry related to Department of Labor (DOL) plan investigations. The advisor asked: “Do you have any insight into what happens during a DOL plan investigation?”

Highlights of the Discussion

  • Yes, the Employee Benefits Security Administration (EBSA) division of the DOL has a very detailed Enforcement Manual, which the public may access through the DOL’s website (dol.gov). One of the chapters of the manual pertains specifically to the Fiduciary Investigation Program (FIP), applicable to employee benefit plans such as 401(k) plans.
  • Included along with the detailed descriptions and procedures in the FIP are several DOL checklists — referred to as “Figures” in the text — that the DOL auditor completes as part of an investigation. For example:
    • Figure 3 is a Bonding Checklist
    • Figure 4 is a Reporting and Disclosure Checklist
    • Figure 5 is an Individual Benefit Statement Compliance Checklist
    • Figure 6 is the DOL’s general Investigation Guidelines
  • The DOL clarifies that the Investigation Guidelines (Figure 6) should not be considered as either mandatory or all-inclusive but should be used to the extent deemed appropriate for the plan. Also, the DOL can expand the scope of the investigation beyond the original allegations or suggest additional areas of inquiry if new information is uncovered during the investigation.
  • The Investigation Guidelines are arranged in two parts:
    • Part I, Background Information, covers data related to the type and size of the plan, and the responsible parties.
    • Part II, Review Procedures, explores compliance with the Employee Retirement Income Security Act of 1974 (ERISA) and probes for potential violations of ERISA, particularly fiduciary violations.

The investigator may apply additional investigative steps, if deemed necessary.

Conclusion

Plan sponsors can use the DOL’s FIP as a guide for conducting their own fiduciary reviews to uncover any potential deficiencies in their plans and implement remedies before the DOL targets them for formal investigations. For plan sponsors who have already been notified of a pending investigation, the FIP can give them an idea of what to expect.

Pattern

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