Seventy one percent of brokers surveyed by www.hr360.com say that their business clients don’t provide summary-plan documents or maintain plan documents, which are two major requirements of the Employee Retirement Income Security Act (ERISA). The following are top reasons brokers cited for employers not adhering to these two basic ERISA requirements:
- They thought they were compliant by distributing benefit booklets/summaries.
- They were not aware of the ERISA requirements.
- It was too expensive, difficult, and time consuming to develop the documents.
Many companies assume that insurance contracts, certificates of insurance, and benefit summaries fulfill the ERISA requirements for a summary-plan document and plan document, but they don’t include the required or recommended provisions that protect the plan and the employer. Employers/plan administrators may be subject to the following serious penalties:
- Failure to provide a summary-plan document or plan document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110/day per participant or beneficiary for each violation.
- Lack of a summary-plan document could trigger a plan audit by the U.S. Dept. of Labor (DOL).
As DOL has increased its audit staff, more small and large companies are being audited. For more information, visit www.hr360.com.
