Benefit Plan Policies: Developing a Whistleblower Policy

Larry Beebe, CPA

In this series, we are reviewing the written plan policies needed to help your benefit plan stay compliant and operate most effectively. For a full list of the necessary policies and why your plan should implement them, click here.

When the Sarbanes-Oxley Act was enacted in 2002 whistleblower protection was a key provision of the law. However, these types of laws actually have quite a lengthy history in the United States, dating back to the Continental Congress in 1778. A patchwork of federal and state laws now exists to protect whistleblowers.

A whistleblower is a person who reveals publicly the dishonest conduct or illegal action that occurs within an organization or by the organization itself. All organizations (including benefit plans) that have employees should adopt a whistleblower policy which protects employees who report illegal acts or risky organizational behavior to a board of directors or a board of trustees.

Whistleblower Policy Considerations

For a whistleblower policy to work effectively, the whistleblower must believe that he or she will be protected from unwanted retaliation. Here are the key provisions your benefit plan should include when developing this policy:

  • Policy Objectives. The policy should clearly detail who is protected and from what. Often it is difficult to draw a distinction between protected activity and non-protected activity. Your policy should be as clear as possible in this area.
  • Reporting Responsibility. Among those activities which trustees and employees of benefit funds should be required to report are:
    • Questionable accounting matters
    • Illegal acts
    • Violations of the plan’s conflict of interest policy
  • Authority. Not only should the policy state the person or persons within the organization to whom the matters should be reported, but it should also detail the specific actions required to be taken by that person(s) once the report is received.
  • Confidentiality. If possible, the confidentiality of the person filing the complaint should be maintained.

Your plan’s whistleblower policy should be reviewed regularly because new laws and regulations are still being enacted. For more details about this type of policy and what it should include, consult the Trustee Handbook published by the International Foundation of Employee Benefit Plans.

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