An increasing number of studies are finding that more employers may stop providing benefits to their employees once the health care reform takes effect in 2014. The majority of companies are continuing to offer their employees some benefits in the form of a qualified employee benefit plan.
For those employers that offer employees a qualified employee benefit plan, the Department of Labor (DOL) and the Internal Revenue Service (IRS) will regulate the plan. The majority of employers who offer a benefit plan to their employees understand the significance of their responsibilities to the DOL, the IRS, and their employees. The DOL requires an annual audit for plans that have more than 120 participants. The audit ensures the necessary funds will be available to provide the benefits promised to employees and ensures the plan remains compliant with federally mandated regulations.
As a result of the conditions that contributed to the financial meltdown a few years ago, there is an increased demand for transparency and more regulations in the business world. Therefore, the DOL has dramatically increased its oversight of employee benefit plans, its search for noncompliant transactions, and its assessment of penalties.
Because most employee benefit plan audits are highly specialized, it is important for employers to adhere to best practices as they relate to audits. Here are a few key best practices to keep in mind:
- Develop a strong team
- Select a Plan Administrator
- Establish a Committee
- Know the Plan Document
- Document an Investment Policy
- Segregate Duties
- Maintain adequate records