ERISA §402 requires that every employee benefit plan “be established and maintained pursuant to a written instrument”.
There is no specific dollar for not having ERISA plan documents. However, failure to comply with an ERISA requirement can have serious consequences.
In addition to ERISA, the Internal Revenue Code (IRC) requires written ERISA plan documents including:
- IRC §125 requires a written plan document for cafeteria plans.
- IRC §105 (h) requires that self-insured plans be “written”
- IRC §129 requires a written plan document for dependent care plans
ERISA also requires that plans be communicated to employees. A summary plan description (SPD) describing the details of the plan must be distributed to participants within 90 days of becoming a participant. SPDs must be updated every five years if there have been material changes and every 10 years if there have been no material changes. A summary of material modifications must be distributed to participants within 210 days after the end of the plan year with a change. Special rules apply to health & welfare plans.
Failure to distribute an SPD could potentially result in criminal charges under ERISA §501 (willful of Title 1, part 1). In addition, there are penalties up to $110 per day, (up to $1,100) for failure to furnish information requested by the DOL.
We are available to assist you preparing your ERISA plan documents including:
- Retirement plans
- Wrap plans
- Cafeteria plans
- Self-insured plans
- Related summary plan descriptions
Common questions regarding ERISA Plan Documents
Do I need a plan document for each of my welfare benefits?
That depends on how you define “plan”. Many employers refer to their various welfare plan coverages (medical, dental, life etc.) utilizing a wrap plan document to support the one plan concept.
If you refer to your welfare coverages as separate plans with separate plan numbers, separate ERISA plan documents, SPDs and Forms 5500 would be required.
What is a wrap plan document?
A wrap plan “wraps” around existing insurance company policies to create an ERISA plan document. Generally, insurance company contracts are written to protect the insurance company and not necessarily contain ERISA language and plan sponsor protections.
What is a wrap summary plan description (SPD)?
A wrap SPD “wraps” around the insurance company certificates and provides necessary information which may not be contained in the certificate. It is generally a small document but it alerts participants to the fact all the coverages are offered under the umbrella of one plan.
