Why did Kathleen Bass choose a career in employee benefits law?
Kathleen Bass shared that she was drawn to employee benefits law immediately after graduating from Stanford Law School. Having worked in the business world before law school, she wanted her legal career to stay connected to the business environment. Kathleen explained that her passion came from helping employers attract and retain quality employees through strong benefit programs. She highlighted that benefits law supports both sides of the workplace equation—helping employers manage compliance while ensuring employees receive meaningful benefits.
What led Doll Lank to transition into employee benefits law?
Doll Lank began her legal career practicing civil litigation and business transactions. After taking a career break, she explored re-entering the legal field and turned to Kathleen for guidance. Doll realized employee benefits law was an ideal fit because she enjoyed compliance-focused work and helping businesses proactively organize their benefits programs. She emphasized that compliance prevents costly legal issues and that her interest in tax law made ERISA a natural practice area. Unlike litigation, which she found adversarial, she valued using the law as a proactive tool to support growing companies and avoid disputes.
Why is compliance in employee benefit plans so critical?
Kathleen explained that noncompliance with employee benefit regulations can be extremely costly. Employers face potential IRS and Department of Labor sanctions, as well as the risk of losing tax-deferred status for their plans. She stressed that employee benefits law is highly complex, making it unrealistic for employers to manage compliance on their own. As the plan sponsors, employers remain ultimately responsible for compliance, even when working with third-party providers.
What is a plan correction and why does it matter?
Kathleen described a plan correction as the process of fixing mistakes—referred to by the IRS as “failures”—in benefit plans. Errors can range from simple oversights to complicated, long-term compliance issues. Because benefit regulations are so detailed, she emphasized that almost every plan will eventually require a correction of some kind.
What are the most common mistakes that lead to plan corrections?
Kathleen noted that payroll errors are the most common compliance problem. For example, employees who elected to participate in a 401(k) may not be properly enrolled, resulting in missed deferral opportunities. In other cases, payroll systems may not align with plan documents, creating discrepancies in compensation calculations. These issues often require corrections that involve going back and addressing missed contributions.
Doll added that a fundamental mistake employers make is failing to maintain signed copies of their plan documents. Many employers mistakenly treat plan providers as if they are solely responsible for compliance. However, employers hold the legal responsibility, and without proper documentation, they face significant risks if audited by the IRS. Kathleen further explained that the inability to produce signed plan documents can lead to disqualification issues, making document retention a critical compliance requirement.
How can attorneys reduce the cost of a plan correction?
Kathleen shared real examples demonstrating the financial benefits of involving an attorney. In one case, a client attempted to correct a missed deferral error by contributing 100% of the missed amount. Kathleen reduced the correction by 75% because the IRS only requires partial contributions.
In another case, a third-party administrator calculated a corrective contribution of $250,000. After reviewing the case and negotiating with the IRS under the Voluntary Correction Program, Kathleen successfully reduced the liability to about $7,000. She emphasized that attorneys not only understand the law but also know how to advocate for clients to achieve fair outcomes.
What do attorneys look for first in a correction case?
Kathleen explained that the first step is to review the corrective contribution calculations to ensure they are accurate and not excessive. At the same time, she examines plan documents to determine whether the failure was as significant as it first appears. Most importantly, she listens to the employer’s background and circumstances to uncover mitigating factors that can support a reduced correction. Doll agreed, stressing that the process involves analyzing all facts and narrowing the issues before negotiating with the IRS.
How do attorneys work with the IRS and Department of Labor?
Kathleen clarified that not every correction requires government involvement—sometimes self-correction is available. When submissions are necessary, attorneys work with the IRS under its Voluntary Correction Program or interact with the Department of Labor to ensure ERISA compliance.
She explained that the IRS primarily focuses on maintaining plan tax qualification, while the Department of Labor is concerned with fairness to employees and transparency in benefits. Kathleen noted that she always enters negotiations with a strong but reasonable position, backed by legal precedent. If needed, she escalates matters to supervisors while remaining persistent yet respectful. This balance of advocacy and professionalism often leads to favorable outcomes.
Why should every employer involve legal counsel in plan corrections?
Kathleen emphasized that employers often underestimate the value of legal counsel. Attempting to correct mistakes without attorney guidance can result in wasted resources or even further compliance problems. She explained that legal counsel acts as part of a correction team—reviewing calculations, overseeing compliance, and ensuring the most efficient resolution possible.
Doll added that attorneys provide something third-party administrators cannot: exclusive representation of the employer’s interests. While service providers focus on protecting their own liability, attorneys are solely dedicated to advocating for the client. Both Doll and Kathleen agreed that involving an attorney from the start is not only cost-effective but also essential for long-term compliance.