ERISA Law Requirement for Employee Benefit Plan Administration

ERISA Specifications for Employee Benefit Plan Administration

Administrative obligations have been imposed by the federal law Employee Retirement Income Security Act (ERISA) on employers having employee benefit programs. Employers who are providing employee welfare benefit programs like a retirement plan or health insurance plan are subject to the ERISA provisions. Being a federal law, ERISA covers all the administrative aspects of the retirement plans as well as benefits of the employee.

Even though the majority of your ERISA obligations are managed by your insurance company or benefits administrator, it is essential to ensure that you are acquainted with ERISA law requirement such that it will be feasible for you to assess whether the administrator is functioning properly.

What Benefits are covered by ERISA?

Under the Employee Retirement Income Security Act, a welfare program happens to be any program, plan, or even fund which is maintained by an employer for providing:

  • medicinal, hospital or surgical care
  • benefits for accident, illness, disability, or even demise
  • training programs and apprenticeship
  • unemployment advantages
  • scholarship funds
  • legal prepaid services
  • vacation benefits
  • retirement plans
  • daycare centers
  • severance or holiday pay

Administrative Provisions under ERISA

ERISA requires that the majority of the research in conforming to the ERISA is being done by the plan administrators such that there is no need for you to do much of anything unless, of course, you are functioning as your own supervisor. On many occasions, in case you do have a plan with any insurance firm out there, that company is going to function as the plan administrator while taking care of all these obligations as well. You will come across mainly 3 components to ERISA compliance:

  1. Reporting

It is required by ERISA that certain information returns are filed by the plan administrators with the Department of Labor and the IRS, which includes the description of a summary plan detailing the claims procedures in addition to coverage levels of your program. Plans must also be reported when alterations have been made to the plan.

  1. Disclosure

It is imperative for the ERISA that ERISA plan document and info are shared by the plan administrators with the participants of that plan upon request. A wide array of info can be made available to the plan participants including financial information as well as coverage levels.

  1. Paying claims

It is vital for every welfare program subject to ERISA to launch a claims procedure for processing petitions for benefits. Plans are intended to provide the participant with information when his or her claim has not been granted.

erisa law requirement

Requirements for welfare programs

If welfare programs subject to ERISA are offered by you and you likewise have an insurance agreement, your responsibility would be to allocate plan information to the employees, and this can be done easily as soon as the plan becomes effectual for the new hires.

Specifications for retirement plans

Retirement plans are actually subject to complicated specifications under ERISA which can have a strong impact on quite a few retirement program features including disclosure and reporting requirements as well as fiduciary responsibility too.

Forms Needed by ERISA

You will come across many forms which have to be completed for every single ERISA plan. In case you’re fortunate, your retirement plan administrator will be managing these on your behalf. It is essential to ensure that you’re absolutely certain which person is going to do what task.

IRS forms

It is imperative for the Welfare plans to file a yearly report with the IRS (Form 5500-SF or Form 5500).

In general, nevertheless, it is not essential to fill all of the other forms needed by the IRS for retirement programs. You will come across some rare instances where it might be imperative to fill other forms with the IRS; however, those circumstances won’t happen often whatsoever. It is the duty of your administrator to let you know in case you do experience such situations.

Labor forms Department

You will come across lots of forms which have to be filed by the welfare programs with the US Department of Labor. Luckily, the majority of them exclude small welfare programs.

Being a small establishment, the form which has to be filed by your administrator with the Department of Labor happens to be a financial statement which sets out the financial state of the plan. That obligation can be fulfilled by small employer programs by filing Form 5500-SF or Form 5500 along with attachments with the Department of Labor.


ERISA Law Requirement For Employee Benefit Plan Administration

All You Need To Know About Summary Plan Descriptions (SPD)

Summary Plan Descriptions (SPD) And All You Wanted To Know About Them

It is imperative for the Benefit Plans which are subject to Employee Retirement Income Security Act (ERISA) to furnish the workers with an SPD (Summary Plan Description) and this document must be kept updated as well. Summary Plan Descriptions can be considered to be the primary legal documentation for the purpose of communicating plan rights, benefits, as well as obligations to the workers of a business.

business is held together by compliance and its workersIt is imperative to provide an SPD within a span of 3 months after covering an employee with this benefit plan. On the contrary, it will be possible to provide the SPD within 120 days in case the plan happens to be a new one.

Any info mentioned within an SPD is liable to modifications. In the event of any such change, it is feasible to restate SPD or even amend it by means of an SMM (Summary of Material Modification). A Summary of Material Modification is implemented for describing any alteration in the plan. In general, it will be imperative to provide an SMM within a span of 210 days following the completion of the plan year when the adaptation of the change took place. Nevertheless, it will be compulsory to provide the SMM within 2 months of the date when the change was adopted in case the alteration is related to a reduction of covered services or benefits.

To get the best effects, a lot of employers are in the habit of providing an SPD along with the enrollment materials of the plan before the plan is able to cover the employee, while the SMM will likewise be provided by the employers before the effectual date of modification. In case a plan is being amended by means of an SMM, it will be essential to restate the SPD for incorporating all SMMs and it must also be provided once again every 5 years to the participants.

Below, we have mentioned what descriptions must be included by the Summary Plan Descriptions or SPD plans as per the regulations of the Department of labor.

Descriptions to be included in SPD plans:

• Provisions for cost-sharing consisting of deductibles, premiums, coinsurance plus co-payment amounts for which the beneficiary or participant is going to be responsible

• Whether the plan will cover any new or existing drug

• Lifetime or yearly caps or any other restrictions on benefits provided by the plan

• The plan covers the preventative services to what extent

• Whether the plan provides any coverage for medicinal devices, procedures, or tests

• The limits or conditions that are applicable for obtaining the emergency medicinal care

• Limitations or conditions on the selection of specialty medicinal care providers or primary care providers

• It is also essential for the SPD to explain how will it be feasible to obtain the plan benefits as well as the procedure for appealing any denied benefit

• Provisions involving utilization review so as to obtain a service or benefit under the plan

The methods of delivery:

The SPD ought to be delivered by the administrator to the participants through reasonable calculation for ensuring actual receipt.

We like to mention another essential thing here: It is compulsory to treat any pursuant covered by children to a competent medicinal child support order (or their caretakers) as well as the surviving spouses as partakers for purposes of the rules of the SPD delivery.

The permissible methods of delivery are going to consist of the following:

First class mail

• Hand delivery

• Electronic in case the worker does have any work-related access to the computer as an integral part of their day-to-day chores and:

  1. The employer takes reasonably calculated measures to make sure that the system intended for furnishing the documents leads to the actual receipt of information which has been transmitted (for example, making use of return receipts, notice of any electrical mail feature which has been undelivered, and so forth)
  2. The recipient is advised by the electronic notice that he or she will get hold of a paper copy without paying anything at all upon request
  3. The recipient is informed by the electronic notice regarding the significance of the document

It will be imperative for the plan administrator to take appropriate and also sensible steps in case a disclosure consists of any personal info pertaining to the accounts as well as benefits of an individual, and he will do this with the intention of safeguarding that information’s confidentiality.


Do you have additional questions or need assistance with your Summary Plan Descriptions? We also do other compliance consulting including Form 5500, 401K and wrap plans. Do not hesitate to contact us with your business compliance issue. We are the experts in benefits compliance consulting!

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Phone: (515)-244-2424

Form 5500 Facts

What is Form 5500?

This is an annual report that your business needs to file with the Department of Labor (DOL) to report information about your 401(k) plan operations, investments, and financial conditions. In general, if you have a retirement plan such as the 401(k) and Profit-Sharing Plans, you need to file a Form 5500 every year you have the plan. The following are important Form 5500 Facts.

Who is Required to File the ERISA Form 5500?

Any sponsor of a plan that is subject to the Employee Retirement Income Security Act (ERISA) needs to complete Form 550. These may include:

1. Pension plans
2. Severance pay, life insurance, dental, or medical plans
3. Retirement arrangements
4. Annuity arrangements
5. Stock bonus, money purchase, 401(k), or profit-sharing plans

When Should it be Filed

The deadline for filing Form 5500 is the last day of the month after the seventh month following the end of the plan year. If your plan follows a calendar year plan, you have to file the form by July 31st. Nonetheless, you can always file Form 5558, which gets you an automatic two and half month extension. However, you have to file your Form 5558 before your Form 5500 deadline.

form 5500 facts and filing How to file Form 5500 Filed

Since January 1st, 2010 the US Department of Labor requires that you file your Form 5500 through the EFAST system on https://www.efast.dol.gov/welcome.html

The Different Plans Available

One Participant Plans

The one-participant plan applies to you if you are a business owner with no employees. However, the plan can cover you and your spouse.

If you are running a one-participant plan, you could either file a Form 5500-SF or the Form 5500-EZ. Form 5500-SF needs to be filed electronically while Form 5500-EZ needs to be filled in on paper and submitted to the IRS. In some instances, you may not have to file any 5500 form when you are operating under the one-participant plan. Generally, if the assets in your plan are no more than $250,000, you may be exempted from filing.Plans with less than 100 participants.

If your plan has less than 100 participants, you will need to file Form 5500-SF through EFAST.

Plans with 100 or more participants

If you have a plan that has 100 or more participants then you have to file Form 5500 electronically.

Penalties for Non-Compliance

There are stiff penalties for compliance that may include:

1. A fine of $10,000 or imprisonment for five years or both for any person that makes false representations or false statements, or knowingly conceals or fails to disclose any fact required by ERISA.
2. A fine of $2,063 for every day the sponsor refuses or fails to file an accurate or complete report.
3. Imprisonment of up to 10 years or a fine of $100,000 or both for knowingly violating the requirements of ERISA
4. A fine of $1,000 for failing to submit an actuarial statement according to the provisions.
5. A fine of $25 every day to a maximum of $15,000 for failing to file returns for bond purchase plans by the due date, annuities, and trusts, and certain plans of deferred compensation.

Retirement plans need to file Form 5500 every year to avoid heavy penalties. As a sponsor, it is very important to file Form 5500 on time and ensure the accuracy of the data reported to avoid stiff penalties. While it is not your typical tax return, the form is an important source of data by the DOL and the IRS for identifying what plans need an audit. The time spent reviewing that information will be time well spent. Overall, both the DOL, the IRS and you as the plan sponsor will benefit from having a well-operated employee benefit plan.


Get help now with Form 5500 and benefits compliance.

Or call (515)-244-2424 for ERISA Compliance Support – Form 5500 Preparation & 401K Filing Services

Benefits Compliance Trends in 2019

We are past the midway point of the new year, with the job market experiencing a few adjustments concerning benefits. Given the advancement of the digital age and the need for organizations to cut down costs in every way possible, change is a constant expectation in the modern workplace. In particular, the following benefits compliance trends are catching on:

1) Revision of umbrella covers to personal packages
Employer-sponsored group coverage has long been the general rule of thumb for companies, but now organizations are switching to an alternative tactic. Employees instead propose individual plans as opposed to securing a blanket offer as has typically been the case. Moreover, with companies preferring the path of high-deductible health plans (HDHP), there’s also heightened attention on tax-advantaged health savings accounts or HSAs.

2) Telemedicine is becoming popular
The National Business Group on Health revealed findings pointing to rising healthcare costs, which are on their way to $15,000 per head. In an attempt to ensure prices don’t spiral out of control, healthcare providers are utilizing telemedicine to reduce in-person doctor visits, which are significantly more expensive. What’s more, insurers are encouraging consumers to seek out generic alternatives to costly prescription while they are also offering discount cards after negotiations with manufactures.

3) More comprehensive analysis
In previous years, employers broadly grouped workers in categories such as generation Z, X, and millennial’s with a view to targeted benefits offerings. However, there has been a change in terms of employee data tracking and recording. At the moment, employers are taking note of individual employee preferences while also keeping an eye on benefits usage. VOIs, anonymous surveys, and email-tracking are some of the new ways organizations are leveraging personal data to come up with smart solutions.

4) Emotional health is a top priority
Many employers have taken measures to safeguard the mental health of those under their payroll. Some companies, for instance, have opted for virtual and onsite counseling to combat mental, behavioral, and emotional complications such as addiction, anxiety, and stress. Alternatively, others are prioritizing network expansion while it’s becoming commonplace for mental health benefits and employee assistance programs to intertwine.

5) Employers’ benefits are becoming more family-friendly
Local and state regulations aside, it’s also in the interest of employers to improve or put in place paid-parent-leave plans with complimentary perks like paid caregiver leaves. Doing so proves necessary at a time when society is rife with changing expectations, and the fierce war for talent is only growing fiercer. The dwindling rates of unemployment have also seen to this with many companies striving to go the extra mile to prove more appealing. On the flip side, employees are also now taking a keener interest in benefits as opposed to salaries.

Companies have been shifting and stretching the goalposts of benefits compliance in 2019, and these five are some of the most significant changes. There’s still a long way to go until the end of the year, and you can be sure of more revisions in the coming months both from the insurer and the employer.


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Technology Compliance Benefits Businesses

Compliance benefits businesses in many ways.

It is obvious we live in a world where technology has now become part of our daily lives. Technology has come to change so many things that were hard to accomplish to be easy tasks completed in a matter of minutes.

Technology has made life quite easy in all aspects not just in the business world. Communication has been enhanced greatly between people who are miles away but they can now see each other as they converse. Information from the head company will reach its branches in a short span of time thanks to technology.

However, there is no good thing that does not have its share of downfalls. Technology too has its limitations. Sometimes it may not be in compliance with the set ethics and standards. It has drastic setbacks in as much as it has made work much easier. In this article, you are going to learn about the benefits of technology in the compliance industry and also the disadvantages of technology as far as compliance is concerned.

Merits of Compliance Technology

It is through technology that compliance programs are able to reduce risk, enhance flexibility, increase efficiency and improve on their performance.

1. Reduce Risk

Your business requires you to roll out a risk-based compliance structure. Technology is known to manage risks more effectively. If you have sufficient knowledge on your compliance program as a complete loop then you have better chances of knowing how to handle when risks occur before they become catastrophic problems.

This will lead to an effective program and thus reduces instances of potential lawsuits. It ensures you reduce your expenses on insurance premiums. Risky activities will now have less impact on the organization’s core business.

Accessing real-time data enables you to find weaknesses and upcoming issues in your program. You will therefore be able to deal with that problem before it grows to a major disaster and hence continuance improvement of your program.

2. Enhance Flexibility

This is another benefits compliance of technology. Have a look back at the time when there were no electrical gadgets like phones and computers. Everything was just very slow and even misquoted. Information did not reach people at the right time.

But look at the world we live in today. Everything is so swift and accurate just like what is needed for the compliance programs. They are constantly changing and therefore people need to adopt real quick. The program ought to be scalable, changeable and flexible to help your employees get updated on any issues and also give them a chance to show their reaction.
As companies grow and open up new branches in other areas, they also need to extend their compliance programs to these new entities to ensure benefits compliance is achieved as you run the program. This pushes the companies to move the compliance technology from desktop and static storage to cloud-based interfaces that are also mobile-friendly.

3. Increase Efficiency

An efficient compliance program needs to have a backbone. These are the driving factors of the same. They are normally the controls, procedures, and policies. The ancient types of programs did not make things run efficiently but technology has really eased the compliance programs and made it an easy task for people.
It becomes easier to develop and upgrade that program, to refresh, review and even update it.

4. Improve Performance

A centralized type of compliance program is more efficient. In the old days, technology was not used as of now where business is keeping the program centralized and control from only one point. This definitely increases your team performance and the program as a whole.
Integrated platforms allow the teams in the organization to link their data together and get to know how a part of your program affects the other.

compliance benefits

Technology Setbacks

The major downfall of technology is they are prone to attack. This is especially if we are talking about electronic gadgets such as computers. They can be attacked by harmful programs that will erase all that is stored on the computer.

These digital tools also use electricity for them to function. In case you do not have back-up generators to use when electricity is lost then the technology is useless at that instance.
Some believe technology have made humans become lazy. Since most of these tasks are being done by machines you find that if the technology fails to work then probably no work that day. Whereas it could just be a simple task but humans are now used to the machine so they feel they cannot do it. Others might believe that the machines do more work in one day than humans do in a month and does a better job. Either way, technology compliance benefits businesses.

We make the process simple. We are ERISA compliance specialists.

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ERISA Wrap Plan Document Preparers Are Available For Business

Before exploring the ERISA Wrap Plan Document Preparers, everyone should know about a few mandatory terms like “What is ERISA?”, “How it is associated with terms like Wrap Plan document?”, “Benefits of ERISA”, “Summary Plan Description”, “Summary of Material Modification (SMM) documents” etc. In this article, we will explore above-mentioned terms in detail. Let’s explore them one by one.

ERISA: ERISA is termed as the “Employee Retirement Income Security Act of 1974” implemented for United States employees. It creates minimum standards plans for employees working in private industry in terms of pension plans.

Plan Document: A plan document consists of all the benefits which will be given employees such as welfare and health benefits. It does not depend upon the company size, whether it’s small or big.

Every company is bound to manage a plan document for every employee. A plan document also consists of the overall term and condition of the plan prepared by the employer. It is not compulsory to write a plan document. If you don’t have a plan document in writing, then don’t worry. We can help.

Wrap Plan Document: A wrap plan document is similar to a plan document. But there is a minor difference in both of them i.e. A wrap plan document consists of every welfare and health benefits plan and wraps them all into one single plan document.

Wrap Document Preparation: ERISA allows all employee to claim their welfare benefit. For this, they must have a written plan document. Basic information about the plan is usually recognized by the written document.

Summary Plan Description (SPD): Summary plan Description usually known as SPD is a written document containing welfare benefit plan of an employee which every employer must have. Major aspects covered by the SPD are: Plan name, Plan number, Plan year, the Plan administrator, Detailed summary and description of benefits, Employer tax identification number (EIN), Benefit type, Plan sponsor, List and contact information of providers, Procedures for Qualified Medical Child Support Orders, Loss of benefits statement, USERRA rights, COBRA rights, Statement of ERISA rights, Claims and appeals procedures, Disclaimer and indemnification language, Affordable Care Act disclosures, Plan contribution information etc. Also, the participant must know about the benefits, claims, eligibility requirements, his/her rights etc. and every organization is bound to disclose all this information to the participant. For more information about SPD, contact us through call or email. You can get our contact information from the contact us section.

Summary of Material Modifications (SMM): Summary of Material Modifications usually known as SMM is particularly used by companies when a plan substantially affects the pricing and other key terms. The deadline for submitting Summary of Material Modifications (SMM) is 120 days. Within 120 days, companies should inform the participant about the changes or modifications in their plans. If a company does not submit Summary of Material Modifications (SMM) documents within 30 days after the participant requests it, then there is a penalty of/up to 110$ per day.

Some of the most famous Summary of Material Modifications (SMM) changes:

1. Modification in Coverage
2. Decrease or Removal of benefits payable


Why choose us for ERISA Wrap Plan Document Preparers: We are one of the leading and best in this industry. We have experienced professionals who will help you prepare your ERISA wrap plan document. Some of our services are:

• If you are in need of Assessment of your Plan Document, then you are at the right place. Just fill out your details in the contact form. Our representative will contact you within 24 hours.
• We also provide service like Complimentary review of current Plan documents. As it helps employees to know us better.
• Our experts are one of the best in creating document particularly when it comes Single or multiple benefit Plan Documents and Wrap Plan Documents.
• Summary Plan Descriptions (SPD) and Summary of Material Modifications (SMM) are the two key terms in ERISA wrap document. Contact us for more information.
• We also provide services like Educational presentations, Delivery of required materials, seminars and onsite training. Reach us by email or call.

Still can’t choose our services. Let’s connect over a phone call or email.

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DOL Enforcement Is Up And Guidance Is Down

Did you know that DOL enforcement activities were up considerably at the Department of Labor last monetary year, especially with respect to missing out on individuals, however the lack of additional support continues to be a discomfort factor for the retirement sector, according to attorneys who concentrate on ERISA-related matters.

The DOL did not react to concerns regarding whether it altered the way it determines its enforcement numbers.

” It is clear that (Secretary) Alexander Acosta’s DOL is proceeding for the enforcement priorities and general aggressive position that was begun under the Obama administration,” stated Thomas E. Clark Jr., a St. Louis-based partner with The Wagner Law Group. “We’re seeing that shown at a macro degree with these numbers and also in our method we’re likewise seeing that at a mini degree in defending plan sponsors as well as company in DOL examinations.”

For plan sponsors who are not actively concentrating on their fiduciary obligations and also just how ideal to meet them, the enforcement statistics ought to get their focus, claimed Carol I. Buckmann, companion at law office Cohen & Buckmann PC in New York. “They go to risk,” she added.

The DOL did not reply to inquiries as to whether it changed the method it computes its enforcement numbers.DOL enforcement

Under the current management, the DOL has filed 2 consultatory viewpoints in 27 months. In the proceeding 8 years under President Barack Obama, 28 advising opinions were released– yet simply four in the first 2 years. Under President George W. Bush, the DOL submitted 102 consultatory viewpoints in 8 years, including 23 in the first 2 years.

The overall uptick in enforcement is a trend Ms. Buckmann expects to continue. “I assume that’s amazed some individuals since on the regulatory side under the Trump management we’ve had proposals that have actually maybe loosened up several of the rules … however on the enforcement side we have a different picture,” she said. “That durable enforcement is hosting likely to continue in 2019 and people require to be knowledgeable about that.”

EBSA’s Voluntary Fiduciary Correction Program— which permits planning authorities that have determined specified ERISA offenses to correct the breaches as well as willingly report the offenses to EBSA without coming to be the topic of an enforcement activity– received 1,414 applications in 2018, up from 1,303 the year prior.

Attorneys claimed their customers are trying to find assistance on issues like missing participants and staff member stock possession strategies, which has held true for a number of years.

The EBSA recouped more than $1.6 billion for straight settlements to plans, individuals as well as recipient’s last, consisting of $1.1 billion in enforcement actions, according to data on the DOL site previously this year. The previous year, it recorded $1.1 billion, including $682 million from enforcement activities. Of note, its Terminated Vested Participant Project, which incorporates missing out on individuals, recouped $807.7 million for individuals in defined advantage plans in 2018, up from $326.7 million the year prior, a 147% increase.

What Is ERISA Wrap SPD? Everything You Need To Know

What is ERISA Wrap SPD?

If you don’t know the answer to this question, you’re not alone. There are many people that are unfamiliar with ERISA and its requirements. A lack of knowledge could cause a number of problems for you.

Who Needs To Learn About ERISA?

Anyone who is either an employer or an employee should take the time to educate themselves about ERISA. If you are an employer, federal law requires you to meet the ERISA requirements. If you are an employee, then you are entitled to certain things because of ERISA requirements. You should make sure you are getting everything that you need.

It’s okay if you don’t know a lot about ERISA right now, but you should work to change that. You can find answers to many common questions below.

What Is ERISA Wrap SPD?

ERISA stands for the Employee Retirement Income Security Act. It describes a group of federal laws that were specifically designed to protect the employees that work for a company that provides things like pension or retirement plans. It also protects employees who work for a business that provides insurance coverage.

If an employer offers a plan that is subject to ERISA, they need to make sure that they follow compliance procedures. This includes proper reporting, written plan documents, and a process for documenting claims. Employees must also fill out necessary forms, such as the Summary Annual Reports.

SPD stands for Summary Plan Description. This is a detailed description of the plans and benefits provided. The booklets that insurance companies provide are not enough to be SPD compliant. Employers will have to work to satisfy the Department of Labor requirements.

A Wrap plan can help employers to do exactly that. A Wrap plan is a plan document that can either wrap around one benefit or combine multiple benefits into a single document. With a Wrap plan, employers can ensure that they have documentation with proper ERISA language that they can distribute to their employees.

erisa wrap spd

Who Is Exempt From These Regulations?

The majority of employers are subject to ERISA regulations. The only employers that are exempt are the employers that do not offer benefits like retirement plans or health insurance at all. LLCs, corporations, and nonprofits all have to comply with these regulations.

With that said, there are a few exemptions to the rules that are in place. Governmental employers do not have to follow these regulations, and church plans are exempt as well. This is because churches are currently exempt from taxes. While these types of employers are exempt right now, it’s possible that this could change in the future.

What Are The Penalties For Failing To Meet ERISA Requirements?

If a company does not meet the requirements outlined by ERISA, they will have to face a number of penalties. If the SPD is not given to the Department of Labor by the necessary deadline, employers can be fined up to $152 a day until the correct documentation is given.

If a company continually refuses to submit this documentation, additional penalties could be added on to the ones described above. Any company that is subject to these requirements needs to work hard to make sure that they are compliant with existing regulations.

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If you’re a business owner, you’ll want to take the time to learn more about ERISA and what it requires. You should ask us how we can take away the worries of ERISA compliance.

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Recognizing Summary Plan Description Distribution Requirements

Summary Plan Description Distribution RequirementsWrap plan documents are commonly used by the companies that are trying to find a way to truly present their benefits plans effectively. They need to be able to demonstrate their ERISA compliance in the first place. They also have to communicate effectively with their employees, their investors, and many of the other parties who will be interested in their ERISA compliance. It’s important for them to be aware of summary plan description distribution requirements.

These plans absolutely have to include a summary of the relevant documents. Wrap plans themselves are summaries, which can make things easier already. However, it’s possible to be even more organized than that, especially for the organizations that already have very detailed plans and who need to make sure that everything that they have been comprehensible.

This wrap plan needs to be worded effectively and clearly.

While it should be written formally, of course, the language should still be less formal than the language that will typically be used throughout the rest of the wrap document itself. This summary is what a lot of employees are going to consult when they are trying to understand what is going to be contained in a particular benefits package.

Other professionals will probably consult this summary before they look at anything else in the associated documents. They might only decide to look at the summary, in fact. Even professional scientists will sometimes only read the abstract of a particular science paper, since they have a tendency to read so many different scientific journal articles on a regular basis and they need to be able to save time.

The contents of the wrap plan are excessively important, especially for the people who are trying to find a way to quickly and accurately explain everything to large groups of people, or at least to potentially large groups of people. Obviously, these are documents that can be altered, addressed, and revised. However, getting it right the first time is important, especially since it will provide a useful template for when everything inevitably gets updated at some point.

It’s important to be concise when writing a summary, which has to be relatively short by definition. Specifically, the coverage limitations need to be mentioned, if only briefly. The summary plan is not going to be able to include all of these additional details, but it should at least give people an idea of the extent of the coverage in question. The wrap plan should certainly include direct information on the benefits themselves. People should not just be able to work backwards, figuring out the benefits based on the limitations associated with the benefits and the coverage.

There might be some cost-sharing provisions that should be mentioned in the summary plan, especially if these cost-sharing provisions are substantial at all. However, as long as they are in any way notable, they should still be included as part of this important summary.

Employees will need to have an idea about how they should file benefits claims. While they might have a general idea of how to do this, it’s still important to make this clear. Employees will also be able to participate in these benefits plans at different times, and there should be information related to the timetable involved.

These wrap plans will certainly change at some point, and everything else will have to be revised accordingly. In some cases, informing people about the changes through a different document, such as a summary of the modifications, can suffice.

Companies that present everything this effectively will be able to avoid a lot of issues in the future. They won’t run into problems with miscommunication. In many cases, they will also manage to save themselves a lot of time and effort in the long run. Once these sorts of documents are established, they will usually only need to be modified every now and then. Most of the work will have already been completed. As long as the wrap plan documents and the associated summaries are completed effectively enough initially, there shouldn’t be any worries at all. Getting some assistance with this process can certainly help, especially for the employers who are used to working with lots of different professionals.


Summary Plan Description Distribution Requirements

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Are You ERISA Compliant? Hire a Consultant to Provide Guidance

ERISA, which stands for Employee Retirement Income Security Act is a federal law that safeguards retirement plans such as 401ks and health and welfare benefit plans for private employers. The law has been amended many times since its inception in 1974 in order to provide wider benefits for participants and beneficiaries. The law is administered by the Department of Labor and while violation can have serious consequences in the way of penalties imposed by the DOL, participants and beneficiaries can also launch lawsuits against employers who they feel are not ERISA compliant.

Any employer who maintains welfare benefits plans for employees is subject to this law. This includes corporations, partnerships, limited liability companies, sole proprietorships and nonprofit organizations. The size of the employer doesn’t matter – so long as the employees are subject to benefits the employer is subject to ERISA compliance. There are, however, a couple of exemptions:

• Benefits plans that are maintained by government employers are not subject to ERISA and that includes local, state and federal.

• Benefits plans that are maintained by religious organizations are also exempt.

A small employer who wants to be exempt would have to find a way to fit in either of these two categories.

Which benefits are covered by ERISA compliance?

There are many of them and that is why many employers would rather hire a consultant to deal with this specific issue. Compliance can be tricky and confusing and sometimes employers find themselves afoul of the law through no fault of their own. The benefits that are covered include:

• Medical, hospital and surgical benefits

• Dental benefits

• Vision benefits

• Prescription drug benefits

• Health reimbursement benefits

• Health flexible spending accounts

• Group insurance benefits

• Accidental death and dismemberment

• Death benefits (not life insurance)

• Wellness programs

• Employee assistance plans

• Short term and long term disability benefits

• Disease specific benefits

There are certain benefits that are not covered under ERISA compliance:

• Adoption assistance plans

• Section 125 premium only plans

• Commuting benefits

• Dependent care assistance programs

• Health saving accounts

• Pet insurance

• Financial retirement planning programs

• Health and exercise club memberships

• Liability insurance plans

• Professional development classes

• Scholarship programs

• Tuition reimbursement

• Workman’s compensation as provided by state law

As is often the case with the law, in each of these categories there are clauses and sub-clauses that can be very confusing to a layman. Even for those who understand the law navigating the issue can be a time consuming process that takes them away from other more important duties in the workplace. That is why it is such a good idea to hire a consultant. An ERISA compliance consultant understands what it means to be ERISA complaint and ensures that all clients are doing as required by law.

How do you choose an ERISA compliance consultant?

There are many agencies that claim to help employers with ERISA compliance but you should be careful when you are choosing. You should be looking for a consultant who has guaranteed experience in this area – they should be able to show you proof of some of their work. Ideally, a consultant who has been around for at least 10 years is a good idea because in that time they will have gathered the necessary experience to ensure that their clients are ERISA compliant. They also know the loopholes that the government can use to come after you and they will help you plug them.

A good consultant will be ready with advice and play a preventative rather than a curative role, helping you make sure that you have complied with all federal requirements.

Once you hire an ERISA consultant like us you will be doing to ensure that your employees get their benefits as required by law.


Are You ERISA Complaint? Hire a Consultant Like Us.