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DOL Regional Enforcement Trends Explored

“All politics is local,” former Speaker of the House Tip O’Neill (D-MA) was fond of saying. That principle holds for ERISA enforcement, too, at least according to an expert panel at an Oct. 25 session at the ASPPA Annual conference held in National Harbor, MD.

Drinker Biddle Reath LLP Partner Heather Abrigo and J.K. Nowiejski of Nova 401(k) Associates pointed out that the Department of Labor (DOL) has regional offices as well as a national office — and that they are far more than glorified call centers. To be sure, those regional offices do handle customer service calls. But, Abrigo and Nowiejski observe, they also house regional directors, supervisors, benefits advisors and investigators.

Several enforcement initiatives by regional offices stand out, say Abrigo and Nowiejski.

Form 5500

Late deposit of elective deferral contributions and loan repayments reported on the Form 5500 are garnering regional DOL authorities’ attention. This initiative began at the DOL’s Philadelphia office and is now spreading; at the very least it has reached the Boston and San Francisco offices. Under this initiative, which first focused on large plans but now looks at plans of any size, the regional office sends a letter offering what Abrigo and Nowiejski call an “invitation” to make a correction through the Voluntary Fiduciary Correction Program (VFCP).

Large Defined Benefit Program

This initiative, which also began at the Philadelphia office, focuses on procedures concerning:

  • locating missing participants;

  • informing deferred vested participants that a retirement benefit is payable; and

  • starting benefit payments when participants reach age 70½.

Excessive Fees

Like the Form 5500 initiative, this one began at the Philadelphia office and has spread to others. It includes reviewing disclosures and records to determine whether participants are paying above-average fees; it asks whether the fees are justified, and, if they are not, who is at fault.

Benefit Distributions

This initiative, which began at the Boston office and is spreading to other regional offices, ultimately seeks to ensure that plan fiduciaries are complying with Field Assistance Bulletin 2014-01. It seeks to determine if plan administrators are following the terms of the plan document regarding the form and timing of distributions upon death, disability or termination of employment and whether they are monitoring to ensure that checks are cashed and not “stale.”

Headquarters Initiatives

Don’t forget that there IS still a national office, Abrigo and Nowiejski reminded attendees, and it has its own enforcement projects. These, they say, include initiatives concerning:

  • employee contributions;

  • plan investment conflicts;

  • health benefits security;

  • ESOPs;

  • bankruptcy;

  • abandoned plans; and

  • the VFCP.