DOL releases ERISA enforcement results for 2023  The U.S. Department of Labor released the results of the Employee Benefits Security Administration’s enforcement actions for fiscal year 2023.  Through its enforcement of ERISA, EBSA oversees approximately 2.8 million health plans, 765,000 pension plans and 619,000 other welfare benefit plans. According to the audit, these plans cover 153 million workers, retirees and dependents.  In FY 2023, EBSA recovered over $1.4 billion for plans, participants and beneficiaries. Other key enforcement results include:  EBSA closed 731 civil investigations. Of these, 69% resulted in monetary results for plans or other corrective actions.  EBSA referred 50 cases for civil litigation and closed 196 criminal investigations.  EBSA’s criminal investigations led to the indictment of 60 individuals for offenses related to employee benefit plans. This included plan officials, corporate officers and service providers.  EBSA’s...

As an employer, you may be asking yourself, “What is a wrap document, and why is it important?” Before we get into the full definition, let’s review the history behind wrap documents to better understand how they originated and why they’re important. The federal Employee Retirement Income Security Act of 1974 set minimum standards for employee benefit plans maintained by private-sector employers. Under ERISA, employer-sponsored welfare benefit plans, such as group health plans, must be described in a written plan document. In addition, employers must explain the plans’ terms to participants by providing them with a summary plan description. The insurance certificate or benefit booklet provided by an insurance carrier or other third party for a welfare benefit plan typically does not satisfy ERISA’s content requirements for plan documents and summary plan descriptions. However, employers may use wrap documents in conjunction with the insurance certificate or benefit booklet to satisfy E...

Voluntary benefits are becoming increasingly important to employees as they focus on their physical, mental, social and financial health. As a result, many employers have expanded their voluntary benefits offerings to address employees’ needs and improve their attraction and retention efforts.  Because some of these offerings are disability benefits, it’s more important than ever to understand the differences between short- and long-term disability insurance and COBRA. What are disability benefits? Disability benefits provide guaranteed income or job protection to employees who are unable to work due to serious illness or injury. The most common disability benefits are STD and LTD insurance. However, understanding the differences between short- and long-term benefits and other laws, such as the Consolidated Omnibus Budget Reconciliation Act , can be complicated and difficult for employers to navigate. This article provides a general overview of STD, LTD and COBRA and explores how b...

Employers that are subject to ERISA and operate on a calendar year basis must file their annual reports ( Forms 5500 ) for 2021 with the Department of Labor (DOL) by  August 1, 2022 . An employer may extend this deadline by two and one-half months (until October 17, 2022) by filing IRS Form 5558 by August 1, 2022.  An employer must file a Form 5500 for each separate employee benefit plan that it maintains, unless a filing exemption applies. Employers can combine different welfare benefits under a single plan to simplify their Form 5500 reporting obligation.  Small welfare benefit plans (fewer than 100 covered participants) that are unfunded or fully insured (or a combination of unfunded and insured) are exempt from the Form 5500 filing requirement.  Small plans (fewer than 100 participants) that do not qualify for a filing exemption may be able to use a simplified form (Form 5500-SF “Short Form Annual Return/Report of Small Employee Benefit Plan”) for the annual repo...

On Monday, November 27, 2017, the Department of Labor (DOL) announced that some key provisions of the fiduciary rule will be extended for 18 months. The fiduciary rule, in its most basic context, requires brokers and advisors to act in the best interests of their clients who have retirement accounts, including IRAs and rollovers from qualified retirement plans, including 401(k) and 403(b) plans.  The DOL first proposed the regulations in October 2010 but withdrew them in 2011 after opposition from the financial services industry as well as some members of Congress.  The regulations were reintroduced in 2015 with the final rule becoming effective June 7, 2016.  Compliance with the rules surrounding broker conduct and disclosure was delayed until April 10, 2017.  A transition period for compliance with some of the provisions was put in place from April 10, 2017 until January 1, 2018.  This latest delay will extend implementation of the enforcement provisions of th...

Sponsors of 403(b) plans, both those subject to the Employee Retirement Income Security Act (ERISA) and non-ERISA plans, were required (with few exceptions) to have in place a written plan document by December 31, 2009. Sponsors who did so will be able to restate their plans to adopt one of the prototype plans or volume submitter plans when they become available. The Internal Revenue Service (IRS) issued Revenue Procedure 2013-22 in March 2013, which provided guidelines for issuing opinion and advisory letters for §403(b) prototype plans and volume submitter plans. The Revenue Procedure stated that a remedial amendment period would be available whereby eligible employers could retroactively correct defects in the form of written 403(b) plans. The Revenue Procedure defined a defect as a provision (or the absence of a required provision) that causes the plan to fail to satisfy the operational requirements of Section 403(b). Revenue Procedure 2013-22 stated that any such defect must be c...

Due February 28th Paper filing of Form 1099-R to IRS for distributions made in 2016. Section 6055 Reporting - Forms 1094-B and 1095-B. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically. Section 6056 Reporting - Forms 1094-C and 1095-C. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically. If you have any questions, or would like to begin talking to an advisor, please get in touch by calling (800) 388-1963 or email us at hbs@hanys.org.

Understanding your retirement plan’s fees is not only a good practice; it’s a fiduciary requirement as prescribed by the U.S. Department of Labor (DOL) under the Employee Retirement Income Security Act (ERISA). The traditional enforcement mechanism has been DOL plan audits. More recently, high-profile litigation has driven plan sponsors to evaluate their plan fees. These fees can be grouped into several categories: record keeping, administrative, legal, plan advisory, investment, and education and communication. The principal reason fees have been thrust into the limelight is that plan participants often bear most, if not all of the cost of running the plan. This article does not discuss how to determine if fees are reasonable, but instead explores a relatively new debate over which fee assessment methodology is fairer. Since DOL has been silent on this issue, it affords the plan sponsor the opportunity to determine the most appropriate structure for their plan based on their demo...

As target date funds continue to garner a significant portion of retirement plan assets, it becomes increasingly important for plan fiduciaries to establish a process for comparing and selecting target date strategies. HANYS Benefit Services has created a Fiduciary Checklist for Target Date Fund Decisions . Download the attached checklist to help plan fiduciaries stay compliant and feel confident they are following the Department of Labor Tips for ERISA Plan Fiduciaries. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (800) 388-1963 or e-mail us at h bs@hanys.org .

The recent U.S. Supreme Court ruling in Tibble vs. Edison has been described as “historic,” “ground-breaking,” and even “revolutionary.” The significant attention this case has generated is due in large part to the fact that a case about retirement plans reached the Supreme Court and that the Supreme Court unanimously overturned the lower courts’ decisions. Yet, the underlying premise behind the decision in this case is not particularly glamorous. It is very familiar to us all: the fiduciary responsibilities of a plan sponsor. The key points of the case are as follows: Mr. Tibble argued that his employer, Edison International, acted imprudently by including higher-cost retail mutual funds in the retirement plan when lower-cost institutional-class funds were available. Both the District Court and the Ninth Circuit Court ruled that the six-year statute of limitations precluded the claims from being brought. The Supreme Court overturned the lower courts’ rulings and declared that “a fi...

When it comes to reducing retirement plan expenses, there is no time to waste! Saratoga Hospital wanted to quickly establish a solid fiduciary process. Read about  Saratoga Hospital’s challenges with its retirement plan, and how HANYS Benefit Services was able to reduce its retirement plan expenses and ensure it is in compliance with ERISA regulations. If you have any questions or would like to speak with an advisor about reviewing or establishing a plan, please contact us at (800) 388-1963 or via e-mail at  hbs@hanys.org.

By complying with ERISA section 404(c), sponsors and other fiduciaries of retirement plans with participant-directed investments may shield themselves from liability for poor investment decisions made by plan participants. If a retirement plan meets the requirements of ERISA section 404(c), no plan fiduciary will be liable for any loss that is the direct and necessary result of a participant’s exercise of control over the investment of his or her plan account. For example, ERISA section 404(c) plan protects a plan fiduciary from being liable for the losses suffered in a down market by the 60-year-old who invests his entire account in an aggressive growth fund. However, plan fiduciaries are responsible for the selection or retention of particular investment options and for investments required by the plan or directed by the plan sponsor. This checklist will help you determine how well you are complying with ERISA section 404(c). This checklist is for informational purposes only and is n...

Non-ERISA 403(b) plans seem to be dropping in popularity among non-profit organizations. Given regulatory guidelines that can be difficult to follow, many plan sponsors are finding it harder to maintain a fully compliant non-ERISA plan. If your non-profit still operates a non-ERISA plan, you may want to give some thought to changing over. Historically, non-ERISA plans were a popular choice for many non-profit organizations, since they were subject to relatively little regulation. In general, most plan sponsors chose to maintain a plan outside of ERISA to avoid Form 5500 reporting and mandatory audits if the plan had more than 100 participants. To qualify for non-ERISA status, plan sponsors had to have “limited involvement” in the plan. For instance, non-ERISA requirements precluded employers from being involved in certain basic plan functions, such as approval of plan-to-plan transfers, distribution processing, and addressing applicable joint and survivor annuity requirements. That ...

Fiduciaries of defined contribution retirement plans are under closer scrutiny than ever before. Plan participants are filing lawsuits, the media has increased its attention on fiduciary failures, and during plan audits the U.S. Department of Labor (DOL) now routinely asks for evidence of fiduciary training. In light of the potential personal liability, it is imperative that plan fiduciaries understand their responsibilities and adhere to the standards of conduct that apply to them. The latest white paper,  Fiduciary Roles and Responsibilities Under ERISA Defined Contribution Retirement Plans , presents an overview of Employee Retirement Income Security Act (ERISA) and DOL requirements for plan fiduciaries and others with direct responsibility for retirement plans. “It is important for plan fiduciaries to be aware of what their responsibilities are regarding plan oversight—not only because of their obligations to plan participants but because of the personal liability they take on ...

Approximately one-third of eligible workers do not participate in their employer-sponsored defined contribution plans, such as ERISA 403(b) and 401(k) plans. Research suggests that almost all of these workers would choose to remain participants if they were automatically enrolled. The increased savings would significantly improve their retirement security and may result in improved workplace satisfaction. Some employers have adopted automatic enrollment plans and many more are interested, but the fact that they are potentially liable for investment losses that may occur in such plans has been a major deterrent to wider adoption of this plan design. The Pension Protection Act (PPA) of 2006 removes several impediments from automatic enrollment plans. A key provision of the PPA is amending the Employee Retirement Income Security Act (ERISA) to provide a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of parti...

To continue from our previous installment, understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. If you answer “no” to any of the following questions, you may not be complying with federal regulations. 6. Are you prepared to monitor your plan’s service providers? You should create and follow a review process at predetermined intervals to evaluate whether the current service provider is meeting your plan’s needs. This review should take into consideration the provider’s performance, reports, notices, fees, questions and follow-up. The review should include asking the plan’s service providers about policies and practices, ensuring that plan records are properly maintained and following up on participant complaints. The review process should be documented, and when using an internal administrative committee, you should educate committee members on their roles and responsibilities. 7. Have you identified parties-in-inte...

Understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. If you answer “no” to any of the following questions, you may not be complying with federal regulations. Have you identified your plan fiduciaries, and are they clear about the extent of their fiduciary responsibilities? ERISA defines a retirement plan fiduciary as a person or entity that does any of the following with respect to a retirement plan: Exercises discretionary control or authority over the management of the plan or its assets; Provides investment advice or manages the plan assets for a fee; Has discretionary responsibility in the administration of the plan; and Is specifically identified in the written plan documents as a fiduciary. Fiduciary responsibilities include: Acting solely in the interest of plan participants and their beneficiaries, and with the exclusive purpose of providing benefits to them and paying plan expenses; Carrying out their duties p...

HANYS Benefit Services’ Ten New Year’s Resolutions for Plan Fiduciaries: 1) Keep all plan documents and related records. HANYS Benefit Services recommends that you review the most recent version of your plan documents. Documents are often misplaced as human resource personnel change and computer systems are upgraded. Complete a document checklist to make sure that all applicable documents are available and maintained. These include the Internal Revenue Service determination letter, plan amendments and notices, automatic enrollment notifications, and the summary annual report. Service agreements and vendor contracts should be reviewed periodically to ensure all required services are being provided and agreed upon. Service agreements, such as the plan document, should be kept in both electronic and paper form. 2) Review ERISA bond and fiduciary liability insurance. ERISA-covered retirement plans must maintain an ERISA bond to protect assets from theft and fraud. Maintain written proof of...

The Employee Retirement Income Security Act of 1974 (ERISA) sets the minimum standards for pension plans in the private industry. ERISA also requires accountability of plan fiduciaries which generally would include plan trustees, plan administrators, and members of the plan’s investment committee. The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to avoid large losses. Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Recent court cases, most notably Tibble v Edison and Tussey v ABB, Inc. have made clear that plan fiduciaries will be held liable when they fail to meet their fiduciary responsibilities. In the Tussey case the plan...