We understand the hassles that come with changing labor and tax regulations. That’s why we lend our services from consultation to wrap SPD document generation for employers wishing to comply with these regulations. Is a Wrap SPD needed?
But just what is a wrap SPD? This is a document disclosing details of benefits, the employer affords the employee in compensation for services rendered and is required to be by law to be filed with the department of labor. We’re here to simplify the compliance process for employers.
When the Studebaker Corporation closed down the operations in 1963 due to inability to meet pension promises made to employers, the federal government moved to enact pension reforms. Through the 1974 Employee Retirement Income Security Act all the employers are supposed to view benefit payments to pension plan participants as a form of corporate debt, the participants being the lenders to the sponsor of the plan and therefore comply with some reporting and disclosure rules.
This new perspective requires transparent financial reporting and filing of Form 5500 annually, detailing conditions of benefit plans. Additionally, employers have to provide employees with Summary Plan Description (SPD) of how they will be compensated for their services. Compliance with this ERISA reporting and disclosure rules means additional administrative tasks and documents to be filed. To avoid such extra regulatory burdens, employers have therefore sought ways in which they can simplify these extra administrative tasks.
One stellar way is to use the WRAP SPD. What is WRAP SPD? In the quest to smoothen pension plans administrative tasks, employers have decided to roll up all employee benefits into a single plan and summarize the benefits in a single document using ERISA language. This document is the SPD WRAP document, and it provides details of: All the welfare and health benefits the employer offers the employee and beneficiaries. References to complementary Insurance booklets and certificates Disclosures mandated by ERISA and COBRA (Consolidated Omnibus Budget Reconciliation Act) ERISA however, in particular on how the SPD document content, language, formatting, and deadline. Additionally, changing labor laws make the preparation of the document hectic. That’s why employers need help when it comes to ERISA compliance. We can help employers make the necessary compliance adjustments and also generate the wrap SPD documents using our updated continuously ERISA wrap SPD system.
Who needs WRAP SPD? ERISA is a USA federal tax and labor law that tell Private Sector employers the minimum pension standards they have to comply with. Any private industry employer that provides welfare and health plans, therefore, must satisfy ERISA SPD requirements Health, welfare and other Employer Assistance Programs subject to ERISA requirements must comply with these reporting and disclosure rules.
1. Disclosure: Provide employees with a readable summary of information about the plan. This includes a summarized description of terms and conditions of the program and contains the name and number of the pension plan, benefits afforded plus amounts deductible and co-pay and eligibility requirements. Other mandated information includes the claim filing and investigation process and information on the plan sponsor and trustees. If it’s a medical plan, the employer should detail all the benefits it provided before the 2010 Affordable Care Act.
Additionally, disclose information regarding mothers and newborns. Provide information on COBRA rights if subjected to one. 2. Reporting When it comes to reporting, large plans with more than 100 participants, employers are to annually report on the plan status by filing form 5500 with the labor department and the Internal Revenue Service. Plans with less than 100 participants must file form 5500-SF.
These forms detail if a plan is funded or unfunded plus other operations and investments. Importance of SPD WRAP documents Using wrap to bundle all benefits into a single plan then summarize it in ERISA language for SPD compliance reduces plan administration tasks. The wrap document also makes references to insurance certificates and master contract booklets; therefore, satisfy the SPD.
SPD is used by the Department of Labor to review a firm’s file during an audit. The document, therefore, makes it easy to review and file the form 5500 as only one form is submitted. Additionally, SPD helps translate complex actuarial language into ERISA required, simple style that employees can understand. Failure to comply with ERISA SPD rules attracts a fine. No other documents can be used as WRAP SPD alternatives; this is because the language used and reporting requirement in SPD document differs from different materials such as Insurance booklets and should not be substituted with such. The wrap document, therefore, helps to avoid penalties.
The WRAP SPD not only soothes plan administration tasks but also gives auditors and employees evidence of employer’s consciousness towards the health and welfare of the employee.
Is a wrap SPD needed? BC2CO can help with your wrap plan document needs.