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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The Labor Department's Employee Benefits Security Administration (EBSA) has announced over $1.4 billion in monetary recoveries for fiscal year 2006. This figure includes $829 million in assets restored to plans and benefits recovered by individual workers. In addition, EBSA has reported "tremendous results" in compliance assistance programs. EBSA's oversight authority extends to more than 700,000 retirement plans, approximately 2.5 million health plans, and similar numbers of other welfare benefit plans, such as those providing life or disability insurance. These plans cover approximately 150 million workers and their dependents and include assets of approximately $4.8 trillion.
The $1.4 billion gain for fiscal year 2006 represents a 94% increase over fiscal year 2001 results of $721 million. The highest results in fiscal years 2001—2006 came in 2004 with $3.1 billion in total monetary results, followed by $1.7 billion in 2005, approximately $1.4 billion in both 2003 and 2006, $883 million in 2002, and, lastly, $721 million in 2001.
The $1.4 billion figure for fiscal year 2006 is made up of three components:
$569.1 million from the correction of prohibited transactions and corresponding protection of plan assets;
$829.4 million from the restoration of plan assets and recovery of participant benefits; and
$24.2 million from the Voluntary Fiduciary Correction Program (VFCP).
EBSA closed 3,411 civil investigations in fiscal year 2006, with 2,534 of these (74.29%) yielding monetary results for plans or other corrective actions. EBSA attributes the increase in the proportion of investigations closed "with results" to improved targeting. The number of investigations closed with results has increased by 30% since fiscal year 2001.
In fiscal year 2006, EBSA referred 251 cases for litigation. EBSA and the Solicitor of Labor jointly determine which cases are appropriate for litigation, considering the ability to obtain meaningful relief through litigation, the cost of litigation, the viability of other enforcement options, and agency enforcement priorities. EBSA cases referred to the Solicitor's office are often resolved, with monetary payments, short of litigation. During fiscal year 2006, litigation was filed in 170 civil cases of the 251 originally referred.
In fiscal year 2006, EBSA closed 221 criminal investigations. EBSA's criminal investigations, as well as its participation in criminal investigations with other law enforcement agencies, led to the indictment of 106 individuals. Those indicted for criminal offenses related to employee benefit plans included plan officials, corporate officers, and service providers. EBSA has also increased the number of criminal investigations closed with either a guilty plea or with a criminal conviction by more than 50% from fiscal years 2001-2006.
EBSA's Voluntary Fiduciary Correction Program (VFCP) and Delinquent Filer Voluntary Compliance Program (DFVCP) encourage the correction of violations of ERISA by providing significant incentives for fiduciaries and others to self-correct various plan deficiencies.
The VFCP permits plan officials who have identified certain violations of ERISA to take corrective action to remedy the breaches and voluntarily report the violations to EBSA, without becoming the subject of an enforcement action. In fiscal year 2006, EBSA received 1,468 applications for the VFCP, compared to 62 applications in fiscal year 2001. EBSA has seen a significant increase in VFCP applications since 2001, with 55 in 2002, 240 in 2003, 474 in 2004, 985 in 2005, and finally, 1,468 in 2006. "This enormous increase reflects the extent to which the regulated community has accepted the program," EBSA concludes. In fiscal year 2006, applicants restored $24.2 million in assets to employee benefit plans through the VFCP.
In fiscal year 2006, EBSA's Benefits Advisors handled nearly 165,000 inquiries and recovered $87.1 million in benefits on behalf of workers and their families through informal resolution of individual complaints.
These inquiries are also a major source of enforcement leads. For example, when EBSA becomes aware of repeated complaints with respect to a particular plan, employer, or service provider, or when there is information indicating a suspected fiduciary breach, the matter is referred for investigation. As a result, 718 new investigations were opened in fiscal year 2006 based on referrals from Benefits Advisors. This number has decreased from previous years as Benefits Advisors resolve more inquiries informally prior to a referral to EBSA's enforcement division.
EBSA provides information to workers, retirees, employers, plan service providers, and the public through its printed materials and its website. The website received a record 1.8 million hits in fiscal year 2006. In addition, both English and Spanish language publications featuring participant and compliance assistance information are available through the EBSA's toll-free number (1.866.444.EBSA (3272)).
EBSA also touts its efforts to provide education and outreach events for workers, employers, plan officials and members of Congress. These nationwide activities include assisting dislocated workers who are facing job loss, educating employers of their obligations under ERISA, using a train-the-trainer format to inform Congressional staff of the EBSA programs for their use in constituent services, and providing employees with information concerning their rights under the law. In fiscal year 2006, EBSA conducted 2,134 outreach events.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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