Tips and Takeaways from the DOL

The Department of Labor (DOL) not only requires employers to “get it right,” but they even help employers do it.  Within the past few months, representatives from the DOL have been hosting webinars, as well as putting on full-day seminars for employers, as a part of their Fiduciary Education Campaign.[1]  As I attended a recent seminar in Portland, I was reminded of many important aspects of fiduciary responsibility:

• Understand the plan and your responsibilities
• Carefully select service providers
• Make timely contributions
• Avoid prohibited transactions
• Make timely reports to the government and disclosures to participants

These responsibilities and many others are summarized in some of the DOL’s materials available on their website [2].  The “good stuff” at the seminars, however, comes from the tips and the responses to audience questions which aren’t summarized on the DOL’s slides and materials.  I’ve summarized a few of those top tips, takeaways, and reminders from the day below:

1. The main purpose of the retirement plan is to pay benefits to employees. When you aren’t sure what decision to make as a retirement plan fiduciary, keep in mind this goal.  For example, in instances where a correction is owed to a participant that previously terminated and took a distribution from the plan, it is still the employers’ duty to locate the participant, correct and make a second distribution to the participant… because after all, the goal is to pay benefits to participants. 
   
   
2. As it relates to selection of service providers and their fees, the “cheapest fees” are not always the best. The DOL representative stated this more than once and went on to say that “Sometimes you get what you pay for,” and the DOL doesn’t require you to pick the least expensive.  However, don’t pay for the same services twice.  ERISA allows the plan sponsor to pay for outside expertise when the plan lacks it – but not when that expertise already exists within the plan.  
   
   
3. As it relates to missing (or hard to find) participants and uncashed checks, the DOL expects employers to keep track of their people and their money – including uncashed checks. Although there is not guidance for ongoing defined contribution plans today, the DOL has guidance for terminated defined contribution plans and suggests analogizing to these steps (and documenting).  The DOL also encourages incorporating into the plan the safe harbor provisions for forcing out small sums to avoid the accumulation of missing (or hard to find) participants over time.
   
   
4. Try to avoid participants calling the DOL and complaining. Employers are required to include the DOL’s phone number on the summary plan description, but employers should not encourage their participants to use it.  The DOL suggested employers create a proactive communication strategy with employees so that questions and complaints start with the employer, not the DOL.  For example, if there is a complaint about the recordkeeper, the employer should hear about that complaint from the employee – not from the DOL (who heard from the employee).   
   
   
5. The DOL warned against the failure to send out required participant notices, including the summary plan description. There are daily monetary penalties that may be imposed on employers for not sending out such notices.
   
   
6. Remit participant contributions timely! The DOL warned that as part of the internal controls, periodic self-audits should be undertaken (more frequently than the annual required audit for large plans).  When there are late contributions, corrections should be made with lost earnings.  Keep in mind, that the standard for an employer contribution is different than an employee contribution.
   
   
7. In addition to ERISA, know the DOL guidance or hire someone to help you keep up with it. The DOL referenced several of their Field Assistance Bulletins and other guidance that employers of retirement plans should know.

The DOL shared many more tips, but I found these to be a few of the top tips that employers may find useful in their day-to-day work.  For more information about the DOL guidance and ways to improve your plan’s internal controls, procedures, and fiduciary governance program to comply, contact a Multnomah Group consultant.  

Notes:

[1]  The DOL’s Fiduciary Education Campaign is a compliance assistance initiative of the Employee Benefits Security Administration (EBSA), which is designed to improve workers' health and retirement security by educating employers and service providers about their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA).  See DOL, Fiduciary Education Campaign - Getting It Right - Know Your Fiduciary Responsibilities, available at: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/fiduciary-responsibilities/fiduciary-education-campaign.

[2] Click the dropdown for “Publications” to find important materials including but not limited to Meeting Your Fiduciary Responsibilities, Understanding Retirement Plan Fees And Expenses, Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries, and Reporting and Disclosure Guide for Employee Benefit Plans.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.   Investments involve risk and, unless otherwise stated, are not guaranteed.  Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.