DOL EBSA ERISA Plan Audit Investigation Response

The situation

Maria, 48, is the HR director and de facto plan administrator for a 65-person manufacturing company in Ohio. In January 2026 she received a formal EBSA investigation engagement letter. EBSA is opening an investigation of the company's 401(k) plan, triggered by a Form 5500 that showed employee deferral deposits made 12–18 days after each payroll, and two participant loan balances exceeding the 50% of vested balance limit.

The letter requests 23 categories of documents within 30 days and asks for a written explanation of the deposit timing and the two loan calculation errors.

Maria has never dealt with an EBSA investigation. She called the company's 401(k) recordkeeper (Vanguard), they said EBSA questions go to the employer, not the recordkeeper. She called the plan's TPA (a local firm), they said the investigation is outside their service scope and she needs an ERISA attorney. The ERISA attorney quoted $8,500 for "investigation intake, document review, and written response."

(a) Her violations are correctable under existing programs. The late deposit issue (12–18 days post-payroll exceeds the 7-business-day safe harbor for small plans) is a prohibited transaction under ERISA § 406, but DOL's Voluntary Fiduciary Correction Program (VFCP) allows the employer to correct it by paying the "lost earnings" (the earnings participants missed while the money was delayed) and filing a VFCP notice with EBSA. If corrected before the EBSA investigation concludes, EBSA typically closes the case with no penalty.

(b) The loan issues have a specific correction path. The two participant loans that exceeded the 50% limit are correctable under IRS Rev. Proc. 2021-30 (EPCRS), the loan amounts above the limit are treated as deemed distributions and the borrowers pay tax on the excess. The plan documents can be amended to prevent future violations. This is a defined, self-correctable issue.

(c) The EBSA engagement letter is not a final finding. It is a document request and information-gathering step. A well-organized written response that (1) acknowledges the discrepancies, (2) explains the business context, and (3) describes the corrective steps already initiated under VFCP and EPCRS can often resolve the investigation without formal enforcement.

(d) Maria's situation is largely self-executable. The corrective programs have published calculation tools and submission procedures. The document production is organized by plan document type, a checklist can structure the response. The $8,500 ERISA attorney quote is primarily for professional time to read the same published correction procedures Maria could access herself.

Who receives this

Small and mid-size employer HR directors, plan administrators, owners, and CFOs at companies with 20–200 employees who sponsor ERISA-covered 401(k), profit-sharing, health, or welfare benefit plans and have received an EBSA investigation engagement letter. Secondary: third-party administrators (TPAs) who need a structured response framework for their clients' investigations.

Why the agency will not advise you

DOL EBSA cannot advise plan sponsors on how to respond to its own investigation engagement letters. DOL's website (dol.gov/SelfAudit) is for voluntary pre-investigation compliance only, explicitly inapplicable once an EBSA investigation opens. ERISA attorneys are the only alternative at $5,000–$20,000.

Key facts, with sources

• DOL EBSA investigates approximately 4,600 ERISA-covered plans per year and recovered $1.4 billion for participants and beneficiaries in FY2023. Investigations are opened based on Form 5500 discrepancies, participant complaints, and referrals from other federal agencies. Small plans (under 100 participants) with 'limited scope' audits are the most common investigation targets. Source: EBSA Fact Sheet — FY2023 Enforcement and Compliance Results · EBSA Enforcement — U.S. Department of Labor
• DOL's 'SelfAudit' program (dol.gov/SelfAudit) is a voluntary pre-investigation compliance tool, it allows plan sponsors to identify and correct issues before EBSA opens an investigation. Once EBSA sends a formal investigation engagement letter, dol.gov/SelfAudit is not applicable. The investigation engagement letter opens an adversarial proceeding where EBSA's enforcement attorney represents the government's interests, not the plan sponsor's. Source: DOL EBSA Voluntary Fiduciary Correction Program (VFCP) and SelfAudit · EBSA Enforcement Priorities — U.S. Department of Labor
• ERISA's most common small plan violations that trigger EBSA investigation: (1) participant loans exceeding 50% of vested account balance or 5-year repayment term (IRC § 72(p)); (2) failure to timely deposit employee salary deferral contributions (DOL's 7-business-day safe harbor for small plans); (3) failure to provide Summary Plan Description (SPD) or Summary Annual Report (SAR) to participants; (4) bonding requirement failures (ERISA § 412: plan officials who handle plan assets must be bonded for 10% of the prior year's plan assets, up to $500,000); (5) prohibited transactions between the plan and parties-in-interest (plan sponsor paying plan fees to a company owned by a plan trustee). Each violation has a specific correction path, IRS EPCRS for tax-qualified plan issues, DOL VFCP for fiduciary breaches, with penalties reduced to zero if corrected voluntarily vs. discovered under audit. Source: Most Common ERISA Violations and Corrective Actions — EBSA · Employee Plans Compliance Resolution System (EPCRS) — IRS Rev. Proc. 2021-30

When to bring in a professional

Self-serve responses fit routine cases: clear facts, amounts a business can absorb, and a deadline still ahead of you. Bring in a licensed professional when the amount at stake is large relative to their fee, the facts are genuinely disputed, criminal exposure is possible, or the deadline has already passed. A short paid consultation to sanity-check your plan is often worth it even when you handle the filing yourself.

All sources for this guide

1. EBSA Fact Sheet — FY2023 Enforcement and Compliance Results
2. EBSA Enforcement — U.S. Department of Labor
3. DOL EBSA Voluntary Fiduciary Correction Program (VFCP) and SelfAudit
4. EBSA Enforcement Priorities — U.S. Department of Labor
5. Most Common ERISA Violations and Corrective Actions — EBSA
6. Employee Plans Compliance Resolution System (EPCRS) — IRS Rev. Proc. 2021-30