Navigating the Complexity of EBSA Investigations

Members of the House of Representatives recently raised concerns regarding the Department of Labor’s EBSA investigations into plan sponsors, citing them as lengthy and burdensome, and called for reform. In a Sept. 19 letter to Acting Labor Secretary Julie Su, Rep. Virginia Foxx, chair of the House Committee on Education and the Workforce and Rep. Bob Good, chair of the Health, Employment, Labor and Pensions Subcommittee, stated: “EBSA is failing to conduct its enforcement in a timely manner, creating unacceptable burdens for retirement plan sponsors and negatively impacting retirement savers, retirees, and their families.”

The lawmakers called into question the DOL’s rigorous inquiries, stating that they are often marked by seemingly limitless document requests and extensive interviews that frequently lead to escalated compliance costs — which ultimately have a negative impact on participants. So what can plan sponsors do to avoid drawing DOL scrutiny — and help promote a more favorable and speedy outcome should they find themselves the target of a probe?

Proactive compliance. Regularly update and ensure plan operations are in compliance with current regulations and best practices to remediate areas that might be flagged during an investigation. Review pertinent materials such as summary plan descriptions as well as loan and hardship distribution provision policies. Conduct regular audits to identify compliance issues or potential areas for improvement in the plan’s operations such as plan documents, investments, fees, and other areas of fiduciary responsibility.

Detailed documentation. Maintain thorough and meticulous records of all plan activities, decisions and rationale. Ensuring that information can be easily retrieved and presented when document requests in areas such as plan administration, governance and fiduciary obligations are made.

Continuous training. Ensure that relevant parties are well-trained and updated on the latest in regulations, investigative processes and industry best practices to effectively navigate a review. Consider consulting with legal or compliance experts in EBSA investigations to help guide and prepare the plan.

Risk management. Implement robust risk mitigation practices to identify, assess and manage risks that may be scrutinized during an investigation. Respond to any participant complaints in a timely and appropriate manner.

Cooperation with investigators. Should your plan be subject to a DOL investigation, establish clear lines of communication, respond to document requests promptly and timely redress any errors or issues that are flagged.

Feedback and improvement. After the conclusion of an investigation, gather feedback and insights to improve and strengthen the plan’s operations against future EBSA enforcement inquiries.

The call for reform underscores the challenges faced by plan sponsors facing DOL scrutiny and highlights the importance of preparedness and proactive measures. Unless and until investigative policies undergo significant changes, plan sponsors must remain vigilant, agile and resilient.


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