Employer Self-Protection Recommendation

The number of lawsuits regarding employee benefit plans is on the rise, so employers are advised to exercise greater oversight of vendors, and to make sure their internal processes protect their liabilities as fiduciaries for their plans. One area of increased legal activity is regarding alleged violations of ERISA. One of the most frequent is simply failure to provide required information to employees on a timely basis (e.g., a summary plan description) or to file the Form 5500 – for which failure to file by the deadline increases by $250 per day, up to a maximum of $150,000.  Electronic filing is recommended. Fillable forms are available on the IRS website for those who prefer to file on paper. 

Regular communication between HR and benefits vendors is highly recommended to ensure compliance. If a company is not comfortable having detailed discussions with a vendor, a new vendor might well be in order., Similarly, a consistent pattern of errors on the part of the vendor becomes a fiduciary issue meriting replacement.