Employer Best Practices for Managing a DOL Audit

Cost of Living Adjustments for 2014

The following provides a summary of the dollar limits applicable to retirement plans, health and welfare benefits and the social security wage base for the 2014 tax year.

Retirement Plans

The dollar limits applicable to retirement plans for the 2014 tax year are as follows:
  • Elective Deferrals: $17,500 (unchanged from 2013)
  • Catch-Up Contributions: $5,500 (unchanged from 2013)
  • Total Annual Compensation: $260,000
  • Defined Contribution Limit: $52,000
  • Highly Compensated Employee Threshold: $115,000
  • Defined Benefit Limit: $210,000

Health and Welfare Benefits

The dollar limits applicable to health and welfare benefits for tax year 2014 are as follows:
  • Health FSAs: $2,500
  • Health Savings Accounts (HSAs) Contribution Limit:
    • Family: $6,550
    • Single: $3,300
    • Catch-Up Limit: $1,000
  • DCAP Limit: $5,000/$2,500 (if married, filing separately)
  • Qualified Transportation Benefit Monthly Limit: $250
  • Transit Pass/Vanpooling Monthly Limit: $130
  • Adoption Assistance Maximum Exclusion Amount: $13,190

Social Security Wage Base Increase

In addition to the changes set forth above, the Social Security Administration announced an increase in the wage base for Social Security taxes from $113,700 in 2013 to $117,000 in 2014.


HR Alert

February 2014

Most employer ERISA pension and welfare benefit plans are subject to investigation by the Department of Labor (DOL).  The Employee Benefits Security Administration (EBSA) is the agency of the DOL responsible for enforcing Title I of ERISA (which sets minimum standards to ensure that employee benefit plans are maintained in a fair and financially sound manner), including managing civil and criminal investigations. EBSA civil investigations (commonly referred to as "audits") are the most common type of investigation.  This HR Alert provides a general overview of the DOL's investigative powers in addition to suggested employer best practices for managing a DOL audit. 

What is the Scope of the DOL's Investigative Powers?

Generally, the DOL has the power to investigate whether any person has violated or may potentially violate any provision of ERISA Title I or any regulation or order issued thereunder. With respect to the scope of the DOL's investigative powers, the following rules apply:
  • The DOL's Investigative Power is Broad. Courts have held that a CEO's personal financial records are within the scope of an employee benefit plan DOL audit.
  • Investigations Do Not Require Reasonable Cause. The DOL may initiate an investigation and inspect records, whether or not any reasonable cause exists.
  • The DOL Has the Power to Request Documents "Related To" ERISA Plans. In addition to its power to obtain documents in connection with an investigation, the DOL has broad general authority to request production of documents "related to" an ERISA plan.
What are Employer Best Practices for Managing a DOL Audit?  

Each DOL investigation is different and there are no hard-and-fast rules that will guarantee a successful outcome for every employer under investigation. However, the following suggestions will often make the process easier and may lead to a better result for an employer managing a DOL audit:
  • Treat the investigation as a high priority.
  • As soon as the initial document request is received, consult with experienced employee benefits legal counsel.
  • Elect a point person to be the single person of contact between the DOL investigator and the employer.
  • Keep management and legal counsel updated on the progress of the investigation.
  • Review all document requests from the DOL carefully with legal counsel.
  • Retain copies of any documents that service providers deliver to the DOL investigator.
  • If there are alleged violations and the employer under investigation elects to make voluntary corrections, then legal counsel and the DOL should discuss the corrections in detail to ensure that they are in agreement as to exactly what must be done and when.
What are Penalties for Failure to Comply with a DOL Audit?  

Failure to provide requested plan documents to the DOL can result in a penalty of up to $110 per day up to $1,100 per request.  Multiple requests for the same documents are considered separate requests for purposes of the penalty rule.
This HR Alert was written by:
Anne Tyler Hamby
Employee Benefits Attorney
3525 Piedmont Rd NE
7 Piedmont Center, Suite 300
Atlanta, GA 30305
(678) 949-9264 (office)
(404) 861-7441 (cell)
Specializing in retirement plans, health and
welfare benefits and executive compensation law

This HR Alert is intended to provide a summary of significant developments to clients and friends.  It is intended to be informational and does not constitute legal advice regarding any specific situation.  This material may also be considered attorney advertising under rules of certain jurisdictions.

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