Reporting and Disclosure Requirements
By Mark Johnson, Ph.D., J.D.
The Employee Retirement Income Security Act of 1974 (“ERISA”) was enacted by Congress to protect the retirement funds of hard working Americans. While the law does not require an employer to offer a pension plan, it does set minimum federal standards and reporting requirements for corporations, unions, and other entities that choose to provide employees with a retirement or benefit plan.
This article reviews the most significant ERISA reporting obligations, as spelled out in “Title 1 Basic Disclosure Requirements” of the law. Plan sponsors or participants who wish to obtain more in-depth or detailed information about ERISA reporting and disclosure are encouraged to visit the website for the Employee Benefits Security Administration division of the U.S. Department of Labor at www.dol.gov/ebsa/.
Summary Plan Description (SPD)
The “Summary Plan Description” is at the heart of ERISA reporting and disclosure requirements. This document must describe in great detail the key features of any plan governed by ERISA. The benefits, rights, and obligations of each plan member must be clearly outlined using easy-to-understand language.
The following circumstances trigger a requirement for the plan sponsor to provide plan participants with a copy of the Summary Plan Description:
- Within 120 days of the plan becoming subject to ERISA requirements
- New plan participants must receive a copy of the SPD within 90 days of enrollment
- Plan beneficiaries must receive a copy of the SPD within 90 days of the first benefits payment
- All plan members must receive a revised SPD every 5 years if changes or amendments apply
- Every 10 years, whether or not changes have been made to the SPD
Among many other informational requirements, the SPD must identify the plan sponsor, all procedures governing claims benefits, COBRA rights, formulas used to measure a participant’s years of service, and the appeals process for denied claims.
Form 5500 Annual Return/Report of Employee Benefit Plan
Form 5500 is a required annual disclosure filing for every ERISA-governed pension plan, welfare plan, and direct filing entity. It was developed jointly by the Department of Labor, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation in order to satisfy annual filing requirements under both ERISA and the Internal Revenue Code.
Key reporting elements of Form 5500 include but are not limited to:
- Name of the plan, the plan sponsor, and the plan administrator
- The type of plan (i.e., multiemployer, single-employer, or multiple-employer)
- The number of total, active, retired, separated, or deceased participants
- Plan funding and benefits schedules
Form 5500 is a public document that is used by many parties for many purposes. Plan participants can monitor plan performance and compliance using Form 5500, while Congress and federal agencies study consolidated data from many filers to evaluate policy, tax, and economic matters.
The “Summary Annual Report” is a narrative overview from the Form 5500 that must be provided to plan participants and pension plan beneficiaries who are receiving benefits within nine months after the end of the plan year or two months after an approved extension.
Plan sponsors must now file all Form 5500 Annual Reports and any associated attachments electronically.
Notification of Benefit Determination
Information regarding benefit claim approvals or denials must be provided to plan participants on a schedule that varies depending on the plan and claim. When a claim is denied, reasons for the denial and associated appeal procedures must be clearly stated.
Plan participants and beneficiaries have a right to request information about the plan on an as-needed basis. The sponsor generally has 30 days from receipt of a written request for information to reply with documents that typically include the most recent SPD, Form 5500, trust agreement, and/or other documents that describe plan features and operations.
ERISA reporting and disclosure requirements may appear to be straightforward, but can actually be quite complex. Plan sponsors are encouraged to work closely with an experienced ERISA attorney, accountant, or consultant to achieve and maintain compliance levels. Plan participants must follow procedures specified in a plan for information, claims, or denial requests, and may retain an ERISA attorney to represent them when the specified processes are unsatisfactory.
About the Author. Mark Johnson, Ph.D., J.D., is a highly experienced ERISA expert. As a former ERISA Plan Managing Director and plan fiduciary for a Fortune 500 company, Dr. Johnson has practical knowledge of plan documents as well as an in-depth understanding of ERISA obligations. He works as an expert consultant and witness on 401(k), ESOP and pension fiduciary liability; retiree medical benefit coverage; third party administrator disputes; individual benefit claims; pension benefits in bankruptcy; long term disability benefits; and cash conversion balances. He can be reached at 817-909-0778 or www.erisa-benefits.com.
ERISA Benefits Consulting, Inc. by Mark Johnson provides benefit consulting and advisory services and does not engage in the practice of law.
Contact ERISA Expert Dr. Mark Johnson
You can reach Dr. Johnson via email or by phone at 817-909-0778. He is available to confidentially discuss a benefits matter.
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