Many businesses offer some form of retirement plan, and they fall under the guidelines of the Employment Retirement Income Security Act of 1974, also known as ERISA. ERISA sets policies and minimum standards designed to safeguard employees of private sector companies who participate in retirement and welfare benefit plans. Businesses administering a retirement plan without full ERISA compliance could be subject to costly fines.
If your employee retirement plan provides a future income from retirement or allows employees to defer earnings for retirement, it is considered an ERISA-compliant program. As an employer who provides these plan benefits, you are also considered a named fiduciary who takes on administering plans and the liability that comes with it if your plans don’t comply with the guidelines.
Here’s a better look at ERISA and how to ensure you’re compliant with the standards.
Compliance Requirements for Retirement Plans
ERISA assures that employees will have the funds they or their employer have put in their retirement accounts throughout their career. While it is not a requirement that employers provide retirement plans for their workers, those who do are required to be compliant in the process.
An employer’s retirement plan is compliant if they check off the following requirements:
- Plan participants can easily access written documentation and information about their Qualified Retirement Plan’s fund through periodic mailings and printed information available at their workplace.
- The plan is well-diversified to minimize the risk of loss as much as possible when funds are invested.
- The employer can explain how participants can claim their Qualified Retirement Plan benefits without difficulty with the process.
- Participants have a solid grasp of what their retirement plan includes. Compliance also involves periodically giving employees a rundown of financial reports on their retirement funds, including investments made.
Forms Required by ERISA
There are various forms that businesses must complete for each ERISA plan. And while your retirement plan administrator handles these forms, it’s helpful to understand better what these forms are and what they include.
- IRS Forms: Businesses with retirement plans must file an annual report with the IRS. Generally, all of the forms required by the IRS for retirement plans don’t have to be filed by welfare plans. There are certain rare moments where other retirement forms might have to file with the IRS, but those cases are unlikely to happen. In any case, it’s helpful to work with your retirement plan administrator to pursue the best course of action.
- Department of Labor Forms: These are many forms that businesses with welfare and retirement plans must file with the U.S. Labor Department. Fortunately, small retirement plans are exempt from most of these forms. A business with fewer than 100 participants whose benefits are fully insured are exempt from ERISA’s reporting and disclosing rules.
Failure to Comply
This is where having an Orlando Employee Benefit Solutions plan is essential as this helps businesses stay on top of compliance issues and expectations. Employers who fail to comply may find themselves having to pay fines of up to $1,100 per day per late form. The penalties apply to every plan, are a collective, and are not subject to suffer a statute of limitations.
More specifically, an employer with 100 or more participants on four plans, such as short- and long-term disability, life, and dental plans, who file their forms 30 days late can end up paying a fine of $132,000. Failing to comply with ERISA regulations can also present employees’ complaints, costing the employer more money and more time away from business operations.
By complying with these rules and regulations, submitting forms on time, and ensuring protection through Orlando Employee Benefit Solutions plans, businesses may mitigate risk, fines, and damage to their operations.
About The Hilb Group
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (800) 776-3078 for a consultation.