Ensuring ERISA Compliance

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Ensuring ERISA Compliance

An employer who willfully violates ERISA is subject to civil liability and criminal penalties. To ensure compliance, ERISA includes several monitoring mechanisms.

What are the ERISA Reporting Requirements?

Under ERISA, the administrator of an employee benefits plan must provide all participants and beneficiaries of the plan with a document known as a Summary Plan Description (SPD). The SPD must clearly explain benefits, rights, and responsibilities and be redistributed following any amendments. A copy must also be provided to the Department of Labor upon request.

The administrator must also file an annual report containing financial information of the benefits plan. For plans with one hundred or more participants, the annual report must be filed on a Form 5500. For plans with less than one hundred participants, the administrator must use a Form 5500-C every three years, and the abbreviated Form 5500-R in the intervening two years. Some small plans are exempt from the annual reporting requirement. Plan administrators must also provide participants and beneficiaries with a summary of the annual report. 

Who Can File an ERISA Claim?

A civil lawsuit for an ERISA violation can be brought against an employer by a plan participant or beneficiary to recover benefits owed, enforce plan rights or clarify rights to future benefits.

What Are the Possible Criminal Penalties for an ERISA Violation?

If convicted for willful violation of ERISA, an employer may be fined not more than $5,000 or imprisoned not more than one year, or both. If the violation is not by an individual but the corporate entity, the fine imposed will not exceed $100,000.

Additionally, since an employer implementing ERISA benefit plans receives favorable tax treatment, failure to comply may also lead to loss of tax benefits as well.

Do I Need an Employment Attorney for ERISA Violation Claims?

To file a claim against an employer for an ERISA violation is a complicated process, therefore, consulting an attorney to file and defend the case is highly recommended. If you are an employer who is facing a claim for an ERISA violation, consult an attorney immediately.

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Last Modified: 11-22-2013 02:49 PM PST

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