Checklists. Doctors use them. Engineers use them, Pilots use them. A checklist is a tool to manage complicated jobs. Atul Gawande, MD, author of best seller, The Checklist Manifesto: How to Get Things Right, puts it this way:
Checklists not only offer the possibility of verification but also instill a kind of discipline of higher performance.
Putting a Checklist Into Practice
Now let’s put that concept into the context of an individual who has fiduciary responsibilities for an ERISA plan. A checklist can help ensure that you are meeting all of your responsibilities and accomplishing the plan’s objective.
Here’s a 10-point checklist that may help:
- Roster of Fiduciary Roles and Responsibilities
- Plan Documents
- Fidelity Bond and Fiduciary Liability Insurance
- Service Provider Contracts
- Government Reporting
- Employee Communication Materials
- Administrative Policies and Procedures
- Annual Compliance Tests
- Meeting Minutes
- Annual Review Materials
The Checklist Bonus
A checklist can provide an added plus for fiduciaries. It can identify those deficiencies that could be issues on an Internal Revenue Service audit or a Department of Labor investigation. And if you find them, take advantage of the correction programs offered by the Internal Revenue Service and the Department of Labor.
Internal Revenue Service Self Correction Programs
Plan errors can be corrected though the IRS Employee Plans Compliance Resolution System (“EPCRS”) to avoid the consequences of plan disqualification. There are three ways to correct mistakes under EPCRS:
- Self-Correction Program (SCP) – permits a plan sponsor to correct certain plan mistakes without contacting the IRS or paying any fee.
- Voluntary Correction Program (VCP) – permits a plan sponsor to, any time before audit, pay a fee and receive IRS approval for correction of plan failures.
- Audit Closing Agreement Program (Audit CAP) permits a plan sponsor to pay a sanction and correct a plan failure while the plan is under audit
Department of Labor Self-Correction Programs
Reporting and fiduciary issues can be corrected through two Department of Labor programs;
- The Delinquent Filer Voluntary Compliance Program (“DFVCP”) assists late or missed Form 5500 filers in coming up to date with corrected filings.
- The Voluntary Fiduciary Correction Program (“VFCP”) affords plan sponsors the chance to identify and fully correct certain transactions such as prohibited purchases, sales and exchanges, improper loans, delinquent participant contributions and improper plan expenses.
With stepped up scrutiny by the agencies and increased fees and penalties, a fiduciary checklist can be an extremely valuable tool.
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