Pub. 6 2017-2018 Issue 3

Issue 1. 2018 27 Q: What authority does the DOL have with audits? A: The Department of Labor (DOL) has broad authority to investigate or audit an employee benefit plan’s compliance with the Employee Retirement Income Security Act (ERISA). The DOL uses its investigative authority to enforce compliance with the health care reform law, or the Affordable Care Act (ACA). Q: What plans does an audit typically involve? A: Traditionally, DOL audits of employee benefit plans have focused primarily on retirement plans, such as 401(k) plans. However, now that the DOL is enforcing compliance with the ACA, health plan audits are more common. Q: What are the consequences for my dealership if we are audited? A: Being selected for a DOL audit can have serious consequences for an employer. Penalties for noncompliance and other errors found during an audit can be steep. For example, during the 2013 fiscal year, more than 70 percent of audits resulted in monetary fines or other corrective action. The best time for an employer to analyze whether it is ready for a DOL audit is before the DOL comes knocking. Q: What are several factors that increase or indi- cate your dealership’s likelihood of being audited? A: Audits can be random, however, a couple common triggers for a DOL audit include these preventable causes: • Participant complaints. If any of your plans’participants complain to the DOL about potential ERISA violations, your plan will likely be subjected to an audit. For example, according to a DOL audit summary, 775 new investigations in 2013 resulted from participant complaints. • Incomplete or inconsistent information. The DOL is more likely to investigate a plan that has incomplete answers on the plan’s Form 5500, or if information you report is inconsistent from year to year. On Jan. 2, 2018, the Department of Labor (DOL) issued a final rule that increases the civil penalty amounts thatmay be imposed on employers under various federal laws. Here are some of the new penalty amounts: • Up to $2,140 per day: Failure to file an annual report (form 5500) with the DOL (unless a filing exemption applies). • Up to $152 per day, but not to exceed $1,527 per request: Failure to furnish plan related information requested by the DOL. (Under ERISA, administrators of employee benefit plans must furnish to the DOL, upon request, any documents relating to employee benefits) • Up to $1,128 per failure: Failure to provide SBC’s (Summary of Benefits and Coverage). Q: How can my Dealership learn if we are in compliance or if we are in risk of fines and not in compliance? A: If your dealership would like a compliance audit, EPIC will perform one for you at no cost. EPIC ranks among the top 15 retail insurance brokers in the United States and is the largest insurer of auto dealers in the state. DOL (DEPARTMENT OF LABOR) AUDITS ON THE RISE….AGAIN. WOULD YOUR DEALERSHIP PASS AN AUDIT OR WOULD YOU INCUR SUBSTANTIAL FINES FOR BEING OUT OF COMPLIANCE? Alison McCallum has been in the employee benefits industry for over 20 years. She is a Principal with EPIC insurance Brokers and Consultants, the only CNCDA- licensed broker. With this partnership EPIC offers unique services available to SDNCDA dealer members at no cost. If you have questions or would like further informa- tion please feel free to contact her at (949)417-9136 or alison.mccallum@epicbrokers.com .