A quick overview of ERISA:
- Company size does not matter; all companies regardless of size are subject to ERISA guidelines.
- ERISA is a set of DOL (Department of Labor) guidelines that regulate employer sponsored ‘health and welfare’ benefit plans.
- Government and Church employers are exempt from ERISA guidelines (must have 501-exempt status, may not elect IRC Section 410 (d)).
- Employers are required to provide employees with a Plan Document and a Summary Plan Description (SPD), in addition to funding documents and government reporting.
- There are costly penalties and fees for non-compliance.
What is happening now?
The Employee Retirement Income Security Act (ERISA) has been in place for nearly 40 years, since 1974, and requires that a plan sponsor maintain official written plan documents describing the terms and conditions of its welfare benefit plans. Enforcement for small employers has been minimal, however the Department of Labor (DOL) recently hired an additional 884 auditors, which would suggest there will be much greater enforcement moving forward. The penalties for non-compliance are substantial. For example the fee for failing to provide employees with the Plan Document and SPD within 30 days of their request is $110 p/day per employee.
o 10 employees x $110 per day x 90 days = $99,000 Penalty
Employers may receive a letter from the DOL requesting the required ERISA documentation, to view an example of this type of letter click the following link: DOL Sample Audit Letter
As your consultant for health and welfare benefit programs we’re recommending a couple of resources versed in ERISA law who will support you in implementing the required changes for compliance. To learn more about ERISA and connect with an expert please contact us at 408-434-9101 or email@example.com.