ERISA (the Employee Retirement Income Security Act of 1974) is a set of federal laws and regulations that govern welfare benefit plans and qualified retirement plans. Employers must have a written plan document and are required to deliver a summary of it, a Summary Plan Description (SPD), to their participants—regardless of how many employees participate. The SPD is the main vehicle for communicating plan rights to participants. Each year, employers must also prepare a Form 5500 for each plan and electronically file it with the U.S. Department of Labor (DOL). In addition, they must deliver a summary of the Form 5500, a Summary Annual Report (SAR), to each participant unless they meet the strict criteria for the Small Plan Exception.
Does ERISA Apply to You?
Most employee benefit plans are subject to ERISA's requirements—whether they are insured or self-insured. Almost every employer, regardless of its size or number of employees, must comply with ERISA. The only exceptions are church and government plans. Although there are very few exceptions to ERISA's applicability, a great many employers are not in compliance, and most are not even aware of it.
Compliance is Mission Critical
It is mission critical for every employer to be in compliance with ERISA laws before a problem arises. By the time the DOL knocks on your door or an employee lawsuit surfaces, it may be too late. Failure to comply with ERISA can result in unnecessary, time-consuming, and expensive penalties, not to mention employee lawsuits. ERISAPros helps employers get into compliance and then stay in compliance.
Wrap Plan, SPD, & Form 5500
ERISAPros prepares wrap plan documents, Summary Plan Descriptions (SPDs), Summary Annual Reports (SARs), Summary of Material Modifications (SMMs), and annual Form 5500s. We also provide consulting and other services necessary for employers to comply with ERISA as it relates to their welfare benefit plans (e.g., group medical, dental, life & AD&D, disability, and vision insurance policies, as well as plans such as health FSAs, and HRAs.) That's all we do. We don't sell insurance or any other products.
Experienced insurance brokers, consultants, Human Resources and benefits professionals, accountants, and attorneys often hold several misperceptions about ERISA. One is that a cafeteria plan is a wrap plan because it allows various component benefit plans to be pre-taxed. However, a cafeteria plan is not a wrap plan. An employer must prepare a compliant ERISA "wrapper" in order to have a wrap plan.
Another misperception is that an insurance company's group insurance policy or Certificate of Insurance is an SPD. However, Certificates of Insurance are often not SPDs because they rarely contain all of the required ERISA language. In most cases, only an SPD wrapper plus the Certificates of Insurance and component benefit plans constitutes a compliant SPD.
A third common misunderstanding relates to who is responsible for preparing, filing, and delivering SPDs and Form 5500s. Most employers believe that their insurance broker, insurance carrier, accountant, or lawyer takes care of these responsibilities. However, this is usually not the case. ERISA compliance is solely the employer's responsibility.
© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.