Due to the new regulations under 408(b)(2), plan sponsors/fiduciaries are required to provide written disclosures with their service providers that are in line with the new regulations by July 1, 2012 for any services where fees of $1,000 or greater are charged.
If the written disclosures are not in place than the fees paid to these service providers will be considered prohibited transactions under the plan and are required to be disclosed in the supplemental schedules of the plan’s audited financial statements. If the plan does not disclose the prohibited transactions, then the auditor of the plan is required to issue a qualified or adverse opinion on the supplementary schedule.
In addition, the Department of Labor (DOL) has the authority to assess a 15% excise tax on the amount involved and 100% tax on the amount involved if the prohibited transaction is not corrected within a timely manner. Prohibited transactions can also result in the plan losing its tax-exempt status.
Start working with your service providers today to avoid these issues during your 2012 benefit plan audit.
To learn more about Skoda Minotti’s Employee Benefit Plan Audit Group, please leave a message below, or contact Marilea Campomizzi at 440-449-6800.