Labor and IRS Enforcement of the Employee Retirement Income Security Act
HRD-89-32, Jan 23, 1989
Pursuant to a congressional request, GAO reviewed the Department of Labor's (DOL) and the Internal Revenue Service's (IRS) efforts to enforce the Employee Retirement Income Security Act's pension plan provisions.
GAO found that: (1) DOL closed 1,323 individual pension plan investigations in fiscal year (FY) 1987 and closed 718 during the first 8 months of FY 1988; (2) DOL closed investigations of 78 financial institutions serving about 6,300 plans in FY 1987 and closed investigations of 109 institutions serving about 5,500 plans during the first 8 months of FY 1988; (3) during FY 1985 through 1987, DOL cited about 25 percent of the individual plans for violations, but cited only about 18.5 percent of the plans in the first 8 months of FY 1988; (4) DOL identified 573 fiduciary violations in FY 1986 and 574 in FY 1987, and found that the most common types of violations were prohibited transactions and prudence violations; (5) as a result of DOL actions against plans with fiduciary violations, the value of plan assets restored and transactions reversed increased from about $42 million in FY 1985 to about $106 million in 1987; (6) DOL removed about 20 plan fiduciaries per year in FY 1986 and 1987; (7) the average number of staff-hours that DOL spent on each pension plan review increased from 85 hours in FY 1985 to 120 hours in FY 1988; and (8) the average number of staff-hours that DOL spent on each financial institution review was 141 hours in FY 1988. GAO also found that: (1) the number of pension plans that IRS examined totalled about 20,000 in FY 1985, decreased to about 5,300 in FY 1987, then increased to about 12,000 during the first 9 months of FY 1988; (2) IRS cited 20.5 percent of the plans for violations in FY 1985, 32 percent in FY 1987, and 22.3 percent during the first 9 months of FY 1988; (3) the number of violations IRS identified decreased from 18,037 in FY 1985 to 6,409 in FY 1987; (4) the violations IRS cited most often during FY 1986 and 1987 concerned prohibited transactions, minimum funding, and participation and coverage requirements; (5) the amount of excise taxes and penalties IRS assessed increased from $7.9 million in FY 1985 to $12.5 million in 1987; (6) IRS revoked the tax-qualified status of 78 plans in FY 1985, 167 in FY 1986, and 45 in FY 1987; and (7) the average number of hours that IRS spent on each pension plan examination declined from about 15 in FY 1986 and 1987 to about 13.1 in FY 1988.