by Zac Majors
ERISA Compliance – Ensuring You’re Up to Date With a Robust Corporate Retirement Plan
Numerous businesses across the US offer some sort of retirement plan to their employees, following the guidelines of Employee Retirement Income Security Act (ERISA). These guidelines are sort of minimum standards that private sector employers should follow in order to avoid penalties.
But not every employee retirement plan is an ERISA compliant plan. For you to be compliant, your employee retirement plan must provide your employees with a future retirement income or let them defer earnings until retirement.
You, as an employer, will be the fiduciary since you’re the one responsible for the plan. As the fiduciary, you will be responsible for it in case your plan fails to comply with ERISA guidelines.
Do I Need to Be Erisa Compliant?
Any company with two or more than two employees offering group-sponsored retirement plans needs to be ERISA compliant. It is important to remember that the main aim of ERISA is to offer assurance to employees that they will be taken care of after retirement financially, i.e., they will have some money in their retirement accounts once all this is over.
There is no definitive requirement, but societal pressure might keep on reminding you to establish a retirement plan for your employees.
Achieving ERISA Compliance
Achieving ERISA compliance isn’t as difficult as it may seem. There are a lot of requirements to go through, yes, but they are simply daunting to look at. With the help of a good administrator or retirement plan advisor, implementing ERISA requirements can simply be a matter of following a calendar checklist!
The idea is to let an administrator or the HR staff keep a close eye on form deadlines and fill them as and when the date arises. There are other requirements to be met as well, but they are mostly on an ad hoc basis – i.e., as and when circumstances arise.
Checklist for ERISA Compliance Calendar
Here are some requirements that you can fulfill easily by making a schedule on your calendar.
If you made any benefit payments in the last quarter, you should provide a statement to employees within 45 days during this quarter.
For payments made in the first quarter, give your employees a benefit statement. If you made any payments in excess to IRC Section 402(g) limit, make deferrals for that.
If there are any participants turning 72, it’s time to distribute the first-year required minimum distributions.
Again, start with a benefit statement.
A Form 5500 for last year needs to be filed. Distribute a Summary Annual Report for last year to employees.
Send out another benefit statement and applicable notices to participants for any plan related changes or updates. This is also the time to correct any ADP/ACP test failures.
Ongoing ERISA Requirements
Apart from the calendar requirements, there are also the ongoing ERISA requirements to consider. These requirements are to be fulfilled on a day-to-day basis. These include, but aren’t limited to:
- Ensuring the plan is being managed as per the document's terms
- Making annual fee disclosures
- Advising employees of any changes to the plan within 30 days
- All employees must be given the opportunity to sign up for the benefits plan
- Making sure plan payments are made on time
- Regular maintenance of the plan, and more
All of this might seem to be a rather tiresome task, but keep in mind that it requires nothing more from you than keeping a diligent eye out. If you’re looking for detailed advice on how you can become ERISA compliant and give your employees a good incentive to stick with you, get in touch with Centric’s Retirement team and we’ll help you out!
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