“Why should I care about the Department of Labor-Employee Benefits Security Administration?” It’s a good question. As a business owner, if you sponsor a retirement, health or cafeteria plan you’re about to learn why you should.
The responsibility of the Employee Benefits Security Administration (EBSA) is to safeguard over $9.9 trillion in assets maintained in approximately 703,000 pension and retirement plans and 2.3 million health and welfare plans. This is accomplished by a relatively small cadre of investigators and auditors who probe for a wide range of violations. If an investigation reveals a violation of ERISA (Employee Retirement Income Security Act of 1974), EBSA takes action to obtain correction of the violation. When voluntary compliance is not achieved, EBSA may refer a case to Department of Labor (DOL) attorneys for litigation. Plan assets recovered by EBSA go directly back to the plans and participants involved; penalties go to the government. DOL may also provide information to any persons affected by a breach of ERISA (i.e., IRS, HHS, state insurance departments, parties involved in litigation against your plan).
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(By the way, that $9.9 trillion in ERISA plans represents the single largest block of tax favored money on Earth. Consequently, it gets a tremendous amount of attention from the DOL, the IRS, SEC, HHS and all 50 state insurance commissioners. That includes your little piece of that pie, and by extension, YOU as the plan sponsor.)
The DOL has the power to impose civil and criminal penalties and fines and to coordinate with the Justice Department to prosecute criminal violations or litigate large civil matters. For you, as the subject of this attention, it can quickly become a costly matter in terms of money, time, effort and aggravation.
The best way to keep your risk profile as small as possible regarding your ERISA qualified benefit plans is to proactively manage them in compliance with all applicable statutes and regulations. This includes respecting and protecting participant and beneficiary rights, proper management of assets, oversight of service providers and the myriad reporting and disclosure rules. In the end, even if it is a service provider to your plans who violates ERISA, as the plan sponsor the responsibility and liability will always fall into your lap.
Therefore, a suggestion on what amounts to “cheap insurance” – consider engaging a consultant to conduct a thorough analysis of your entire benefits program to identify potential areas of concern and to assist you in designing a “best practices” regimen of policies and procedures to get, and keep, your benefits programs in compliance. As a plan sponsor, you should be proactive in protecting yourself, your business, your plans and your employees.
Disclaimer: This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The Gertsburg Law Firm Co., LPA and Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.
Frank J. Bitzer, Director of Legal Compliance & Employee Health & Benefits at Marsh & McLennan Agency LLC. He can be reached at firstname.lastname@example.org.
Charlie Filisko is Vice President of Property, Casualty & Surety at Marsh & McLennan Agency LLC. He can be reached at email@example.com.
Alex Gertsburg is the CEO and Founder of the Gertsburg Law Firm Co., LPA. He can be reached by email at firstname.lastname@example.org or by phone at 440-571-7775.
Stop worrying if your company is vulnerable to lawsuits or liability and schedule a confidential, no-cost CM6 Vulnerability Check with Gertsburg Law Firm. CEO Alex Gertsburg will walk you through the minefields in your documents and key processes and tell you how to fix them yourself. Call 440-571-7774 or e-mail email@example.com to schedule your CM6 Vulnerability Check today. Explore the full CoverMySix legal audit suite at covermysix.com.
Securities offered through MMA Securities LLC (MMA Securities), member FINRA / SIPC, and a federally registered investment advisor. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Variable insurance products distributed by MMA Securities LLC. MMA and MMA Securities are affiliates owned by Marsh & McLennan Companies.