Penalties hit ERISA plans in spite of CPA audits

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The Department of Labor (“DOL”) assesses significant penalties for an improperly filed Form 5500. Mistakes on an ERISA plan’s Form 5500 create a nice target for the Internal Revenue Service’s auditors, too.

While the number of filing deficiencies are frequent among smaller plans (i. e., plans with fewer than 100 participants), which aren’t required to have an annual CPA’s independent financial audit, the DOL is concerned about the increasing number of deficiencies it sees for plans that receive a CPA’s annual financial audit.

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How ERISA plan sponsors should respond to the new fiduciary rule

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Until now, a retirement plan participant’s transfer or rollover of their account balance to an individual retirement account (“IRA”) was, for the most part, off the grid of plan sponsors’ fiduciary management systems because IRAs were not under the jurisdiction of the U.S. Department of Labor.

Due to the new Conflict of Interest rule, however, IRA rollovers will require a great deal more care and oversight by plan sponsors than before.

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What if your ERISA plan’s CPA isn’t qualified?

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A recent study performed by the DOL found that a startling number of employee benefit plan audits were deficient. The DOL study also found that there was a “clear link between the number of employee benefit plan audits performed by a CPA and the quality of the audit work performed.”

The DOL found that 33% of audit reports reviewed failed to comply with one or more of ERISA’s reporting and disclosure requirements. It believes that this error rate is at an unacceptably high level.

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Has Risk Trumped the Pursuit of Excellence?

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Corporate risk tied to employee benefit plans is escalating, refocusing the pursuit of excellence from program features to risk management. Many businesses and nonprofit organizations are changing their risk management systems in an attempt to meet these increasing risks head-on.

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Computer automation relieves ERISA governance and risk management burdens.

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Broad in its reach, short on implementation specifics, and bristling with teeth, ramped up enforcement of fiduciary duty under ERISA has sent CFOs and HR executives scrambling to get a handle on how to ensure their organizations’ compliant oversight of retirement plans.

As 401(k) and 403(b) type retirement plans mature, the need for internal controls for managing fiduciary practices grows, too. According to Department of Labor reports, those controls are sorely lacking in most plans.

There are 5 key reasons that internal controls for fiduciary governance lag far behind other corporate risk categories. Computer technology offers a convenient permanent solution.

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Retirement Plan Investment Programs Harbor Newly Revealed Risks

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Widespread conflicts of interest and overpricing by many investment firms that serve 401(k) and 403(b) plans have been uncovered by the U.S. Department of Labor (“DOL”). Many executives that manage those types of plans are understandably concerned. Maybe you are, too.

The DOL’s Conflict of Interest; Investment Advice Rule attacks the practices of investment advisors and investment program providers who conceal their conflicts of interest that result in excessive fees for participants in ERISA qualified retirement plans.

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4 Consequences of Not Having a Procurement Plan for Retirement Services

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The executives who make procurement decisions for their organization’s retirement plans, and who are responsible for negotiating the best arrangements with their vendors, are typically experts in the field of finance or human resources. Because of this, often times, these employee benefit plan sponsors do not speak their retirement plan vendors’ esoteric language.

Savvy vendors have capitalized on technical jargon to manufacture an “information gap.” The same language challenge faces buyers of every category of goods and services that businesses and nonprofits purchase with one major difference…those buyers have specialized training.

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Managing Employee Benefit Risks in a New Regulatory Era

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The U.S. Department of Labor’s (“DOL”) change in the definition of an investment fiduciary has ushered in a dramatic shift in risk management focus for chief financial officers and human resource executives. This article explores how the “old school” way of interacting with investment advice providers has been jolted by a new imperative.

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The “So What” of the New Conflict of Interest Rule

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CLD-StandardThe federal government issues new rules and changes existing rules at a dizzying pace. It would not be surprising to hear executives ask “so what” when they hear about the new Conflict of Interest Rule that targets 401(k) type retirement plans.

Even the legal title of the Rule, which contains the words investment advice, suggests that the Rule is something for the vendor of a retirement plan’s investment program to comply with. That part’s true. But the other part deeply affects organizations that sponsor retirement plans.

Audio briefing by Christine Denton, Sr. Vice President

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What is the Fiduciary Standard?

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Business man pointing the text: Standards

A published set of uniformly enforced guidelines and specifications is the essential trait of a standard. Examples of published standards abound in many fields including technology, manufacturing, and healthcare. There is a good reason that CFOs and human resource executives are challenged to know how to comply with the fiduciary standard.

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