Your company may need a benefits consultant or it may need information a benefits consultant can provide. Either way, a benefits consulting group like BC2 can make the management of ERISA compliance seamless.
The employee retirement income security act (ERISA) was passed back in 1974 and contains minimum standards for employee retirement and health benefits. Although ERISA does not require any business to set a plan for meeting these benefits, it requires companies that have such plans to meet specific minimum standards for such compensations. For businesses, it is often much easier to work with an existing plan as it makes things easier when employees retire, get sick, injured or disabled. This is why you need an employee benefits consultant to help you come up with an ideal plan to make the process seamless.
In addition to setting minimum standards, ERISA requires individual managing such retirement benefits plans to meet certain code of conduct. Other provisions are put in place to ensure reporting to government bodies and protect participants so that qualifying individuals get their benefits.
Obligation and violation
As aforementioned, no business is required to establish a plan for retirement and health benefits. However, these plans can help you run your enterprise efficiently despite cases of retirement, accidents, illnesses, apprenticeship and disability. If you choose to establish a plan for paying employees such benefits, then you must be prepared to meet the given minimum standards that include minimum amounts and covers as well as security. Failure to comply with ERISA regulations will make your business subject to a couple of penalties. It is important to know employer obligations and typical ERISA violations.
• Employer obligations – The employer is required to provide participants with a plan that includes important information like major features and financing of the plan. The managers of those covered assets must have delegated fiduciary duties and procedures should exist for employee grievances (and appeal for such grievances) about the plan.
• Typical violations – Violations of the act include improper denial of benefits to qualifying employees (for any reason including racial, gender, disability prejudices). Breaching of fiduciary duties is another prohibited violation of the act. Any other act that results in interference of the rights of employees covered by a plan is also prohibited.
The advantages of a benefits consultant include knowing exactly what to do and what to avoid. Once you know the obligations and violations, treading within the safe line will not be quite overwhelming.
Penalties for non-compliance
If you do not effectively follow ERISA standards, legal penalties will be imposed on your business and/or those responsible for violations. Penalties can be called for in two major ways;
• When initiated by the employee or beneficiary covered by the plan
• When initiated by EBSA (employee benefits security administration) which is Labor’s department enforcing laws related to employee retirement and health benefits.
From these two cases, wrongdoers can be punished in two penalty categories namely civic and criminal. Civic penalties involve paying fines and being required to make certain changes on practice and procedure to ensure covered employees receive their benefits. Criminal penalties may include both fines and those found guilty may be convicted to serve jail-term sentences for violating ERISA regulations.
For civic penalties, guilty parties pay all the benefits denied employees plus the interest accrued when the benefits were withheld. They will also pay all the plaintiff’s attorney fees. Nonetheless, the payment cannot go beyond $1,000 a day for each violation. For criminal, violations (such as backdating paperwork) can call for $10,000 fines while bigger crimes may take as much as $100,000 with jail-terms that reach 10 year sentences. It is therefore important to hire a benefits consultant when designing your employee retirement plans.
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