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Retirement News for Employers - Summer 2011 - Desk Side Chat…With Monika Templeman

Why Plan Sponsors Should Read Our Examination Projects Results

In each issue, Monika Templeman, Director of EP Examinations, responds to questions and offers insights on retirement plan topics uncovered during audits. You may provide feedback or suggest future topics for discussion by emailing her at:,

Monika, your office oversees and posts the results of LESE Projects for plan sponsors’ review. Can you explain this acronym?

LESE stands for Learn, Educate, Self-Correct, Enforce - the steps in the project process.

We sample a small population of Form 5500 returns to learn about a specific problem plan sponsors may be having with compliance.

We publish what we learn on the Web and create outreach materials to educate plan sponsors about a specific compliance problem.

Plan sponsors can use our published information about a specific compliance problem to perform a self-audit, and, if necessary, self-correct using one of our correction programs.

We take a firm position with those plan sponsors who choose not to correct their errors.

What type of information will plan sponsors find in these reports?

They will find detailed explanations about the most frequent plan errors and tips on how to avoid these errors. I’ll use the 401(k) Top-Heavy Project Report as an example.

  • First, we list the specific test group, which was 401(k) plans covering three to eight participants with the potential to be top-heavy.

  • Second, we present a brief overview of the requirements of the Code and regulations.

  • Third, we state the project results, a list of the top six errors we found, and provide detailed information on the top two errors. For example, this project’s report shows that the second most frequent error was that plans were in violation of the top-heavy contribution requirements. The report then describes the top four reasons for that error. In this instance, the main reason was that plan sponsors weren’t testing for top-heaviness.

Should plan sponsors use this project’s findings to make certain their plans comply with the top-heavy rules?

Yes, I highly recommend this approach; it is our key reason for publishing these reports. Plan sponsors who use the reports to perform an internal check on their plan can determine if their plan is in compliance and if not, use either the Self-Correction Program or Voluntary Correction Program to correct the identified mistakes.

What are some of the other LESE projects?

We are preparing 10 new reports that we’ll post to our LESE Project page. Some of the upcoming project reports include:

  1. 401(k) plan Form 5500 returns that disclosed corrective distributions that did not properly correct excess contributions (for example, incomplete ADP/ACP corrective distributions). The primary issue we found was plans only partially corrected ADP test failures.

  2. We obtained a snapshot view of small qualified plans with investments in real estate that also had either additional investments in participant loans or filed a Schedule D (DFE/Participating Plan Information). We wanted to get a better understanding of problems associated with plans with these types of investments. We found that the two main issues were prohibited transactions involving participant loans and failing to use fair market value for real estate and other investments.

  3. Another project focused on defined contribution plans reporting an average employer contribution per participant that appeared to exceed the Code §415(c) dollar limit.

  4. We audited Forms 5500 for 401(k) plans that showed participant contributions may have exceeded the Code §402(g) elective deferral limits.

Visit for information on upcoming projects and reports.

Page Last Reviewed or Updated: 23-Aug-2013