Avoid These ERISA Compliance Pitfalls

ERISA consists of the initial law, several amendments, and a massive number of regulations. Compliance is mandatory for most plans. Non-compliance usually results in harsh penalties or even criminal indictments. This article explores some common ERISA compliance pitfalls.

Failing to Provide COBRA Notices

Employees who no longer qualify for employer-paid health insurance may continue their coverage under the Consolidated Omnibus Reconciliation Act. However, plan administrators are required to send notices to eligible employees, including:

  • General Notice – This is provided to new participants and spouse within the first 90 days of coverage.
  • Qualifying Event Notice – A document that is given to the eligible employee by the employer within 30 days after the event or by the group health plan administrator 60 days or more after the qualifying event.
  • Election Notice – The plan administrator has 14 days to send this description of the employee’s rights and information about filing an election.
  • Notice of Unavailability of Continuation Coverage – This notifies the employee within 14 days that he or she is not qualified for COBRA.
  • Notice of Early Termination of Continuation Coverage – The employee is notified as soon as possible that health coverage is being terminated earlier than expected.

This information pertains to most plans. However, rules for multiemployer plans may vary. In any event, COBRA requirements should be reviewed any time a qualifying event occurs.

Poor Recordkeeping

It’s always important to maintain organized business records. However, ERISA contains specific provisions about document retention.

ERISA, Section 1027 states that anyone required to file reports must keep records related to benefit plans that support their actions for at least six years after the filing date of documents or after the date documents would have been filed absent an exemption.

Penalties for violating ERISA recordkeeping requirements can be steep. Keeping well-organized records may also ease the burden of preparing and submitting reports.

Inaccurate or Late Filing of Form 5500

Another ERISA compliance pitfall to avoid involves IRS Form 5500. This report is filed annually by all qualified retirement plans covered by ERISA with more than 100 participants.

The form, along with attached schedules, is due on or before the last day of the seventh month following the close of the plan year. For example, if a plan follows the calendar year, then Form 5500 is due on or before July 31st.

Companies that fail to file an accurate form on time face stiff fines.

Compliance is Critical, but Regulations Are Complicated

At Hall Benefits Law, we work extensively with clients to ensure they avoid ERISA compliance pitfalls. Please call 678-439-6236 to discuss your concerns with an experienced attorney. Our website contains more information about our firm, a Contact Form, and free resources for your review. From our home office in Georgia, we assist clients throughout the United States.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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