DOL Announces Expansion of Defined Benefit Pension Plan Audit Program
January 27, 2016
By Hrishi Shah
The U.S. Department of Labor (DOL) recently announced that it is expanding an audit program directed at large defined benefit pension plans. The program, which originated in the DOL’s Philadelphia region and is expanding, is looking at pension plans that the DOL suspects have failed to attempt to locate terminated vested participants who have reached their required beginning dates (which is generally April 1 following the date a participant reaches age 70 ½), and are entitled to receive required distributions.
The DOL chooses audit targets by examining plans’ annual Form 5500 filings to find plans with high numbers of participants eligible for benefits. In past audits, DOL investigators have assessed whether plan administrators are diligently tracking the ages and whereabouts of terminated vested participants. Investigators also look at whether plans have robust written procedures in place for locating missing participants, and whether plans actually follow those procedures.
The expansion of this audit program underscores the importance, particularly for larger retirement plans, to keep detailed records of their participants, especially vested participants. Plan administrators should also maintain and routinely follow written procedures for locating missing participants.