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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.
Panelists at a recent CCH audio conference stressed the need for plans to conduct compliance self-audits, particularly in light of recent regulatory initiatives undertaken by the Labor Department. The audio conference, "Fiduciary Responsibility After PPA 2006 – The Law & Its Practical Applications," was held on November 14, 2006, and featured Michael B. Snyder, an attorney who is Of Counsel in the Rochester, N.Y. office of the law firm of Harris Beach and Brian Costello, Senior Vice President, Sales and Marketing at Genesee Valley Trust.
Snyder pointed to a recent Labor Department enforcement initiative, the Consultant/Advisor Project (CAP). According to the website of the Labor Department's Employee Benefits Security Administration (EBSA), the CAP project will focus on the receipt of improper, undisclosed compensation by pension consultants and other investment advisers. EBSA's investigations will seek to determine whether the receipt of such compensation violates ERISA because the adviser/consultant used its position with a benefit plan to generate additional fees for itself or its affiliates. EBSA says that it may also need to investigate individual plans to address such potential violations as failure to adhere to investment guidelines and improper selection or monitoring of the consultant or adviser. The CAP will also seek to identify potential criminal violations, such as kickbacks or fraud.
"Honest service fraud," where services are purchased but fraud is committed on the plan, is called a "potential criminal" action of a fiduciary, Snyder noted. The CAP program appears to be "an avenue for civil and criminal penalties," he suggested. Consultants, advisors, and other plan service providers are cautioned that the Pension Protection Act of 2006 (PPA; P.L. 109-280) has increased criminal penalties to a maximum of a $100,000 fine and 10 years in prison, up from a $10,000 fine and one year in prison.
According to Snyder, the Labor Department will continue to pay attention to the following areas:
Delinquent employee contributions—an issue that comprises about one-third of the DOL's investigations;
Situations involving bankruptcy and financially distressed plan sponsors;
Health fraud, particularly as to multiple employer welfare arrangements (MEWAs); and
ESOPs, particularly on the issue of valuations of employer securities that are either fraudulent, overly optimistic, or out of date.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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