Actuarial, Legal, Reporting and Disclosure

All three are employer practices exempt from ERISA by DOL regulation and require no Form 5500 filing

On-premises perks (e.g., cafeteria), holiday gifts, and employee discounts are all classified as employer practices that are exempt from ERISA reporting and disclosure requirements under DOL regulations.

Welfare plans, and they may in some situations be exempt from ERISA

The course states that severance pay plans are usually treated as welfare plans, not pension plans, and they may in some situations be exempt from ERISA. This classification matters because welfare plans and pension plans have different reporting and compliance obligations.

$100,000

Under ERISA, any person who willfully violates reporting and disclosure provisions faces up to $5,000 in fines and/or one year imprisonment. However, when the violator is not an individual (e.g., a corporation or union), the maximum fine increases to $100,000.

The court may, at its discretion, require the administrator to pay up to $100 per day, but the penalty is not automatic and will not be imposed if the failure was reasonably beyond the administrator's control

ERISA provides that a court may require the administrator to pay up to $100 per day for failure to comply with an information request. The award is discretionary, not automatic, and the court will not impose the penalty if the failure to comply is reasonably beyond the control of the administrator.

There is no monetary penalty for failure to distribute an SPD (though criminal penalties may apply), while failure to file a Form 5500 can result in a civil penalty of up to $2,670 per day

The course distinguishes these penalties: there is no monetary penalty for failure to distribute an SPD, though criminal penalties may be possible. In contrast, DOL may assess a civil penalty of up to $2,670 per day for failure or refusal to file an annual report (Form 5500).

Up to $10,000 or five years in prison or both

ERISA distinguishes between willful violations (up to $5,000/$1 year prison) and false statements or misrepresentations (up to $10,000/$5 years prison). The harsher penalties for false statements reflect the seriousness of fraudulent filings.

The plan may continue to file Form 5500 under the 80-to-120 participation rule since 95 falls between 80 and 120

Under the 80-to-120 participation rule, if a plan has at least 80 but not more than 120 participants at the beginning of the plan year, it may file the same category of form that was filed in the previous year. Since the plan filed Form 5500 last year and has 95 participants (between 80 and 120), it may continue filing Form 5500.

Plans with 100 or more participants file Form 5500; plans below 100 file Form 5500-SF

Form 5500 is required for plans with 100 or more participants at the beginning of the plan year. Form 5500-SF is the simplified form required for plans below 100 participants.

By the last day of the seventh month after the close of the plan year

Table 3-I specifies that the Form 5500 must be filed by the plan administrator or employer by the last day of the seventh month after the close of the plan year. An extension may be granted if application is made before the regular due date.

The tax is 100% of the disqualified benefit, reported on Form 5330

An excise tax equal to 100% of the disqualified benefit is imposed on employers that maintain a funded welfare benefit plan providing such benefits. The return for this tax, Form 5330, must be filed no later than the last day of the seventh month after the close of the taxable year.

Within 90 days after the employee first becomes a participant

Table 3-Ia specifies that new participants must receive a copy of the SPD within 90 days after the employee first becomes a participant. This is distinct from the 120-day deadline that applies after the plan first becomes subject to ERISA.

Denial within 90 days of receipt (extendable by 90 days with notice); claimant has 60 days to appeal; decision on appeal within 60 days (or 120 days in special circumstances)

Table 3-Ia provides specific time frames: the plan must give notice of denial within 90 days of receiving the claim (with a possible 90-day extension if the claimant is notified). The claimant has 60 days to appeal. The decision on appeal must be given within 60 days, or within 120 days if special circumstances exist.

Every fifth year after the plan becomes subject to ERISA, with distribution within 210 days after the end of the five-year period

An updated SPD must be furnished every fifth year if the plan has been amended during that five-year period. If no amendment was made, the updated SPD need only be furnished every ten years. The plan administrator has 210 days after the end of the applicable period to distribute it.

Up to $1,000 per failure (adjusted for inflation; as of January 2024, the maximum was $1,406 per failure)

Table 3-II specifies that the penalty for failure to distribute an SBC is up to $1,000 per failure, subject to inflation adjustments. As of January 2024, the maximum penalty was $1,406 per failure. This is distinct from the per-day penalties for other filing failures.

5% per month up to 25% of the tax due for late filing, plus 0.5% per month for unpaid tax up to 25% per year, plus interest

Table 3-II specifies that late filing of Form 990-T incurs a penalty of 5% per month up to 25% of the tax due, plus 0.5% per month for unpaid amounts (up to 25% per year), plus interest on unpaid taxes.

Whether the plan has obtained approval from DOL before adopting any benefit changes

Table 3-III's compliance checklist covers items like timely Form 5500 filing, fidelity bonds, party-in-interest transactions, records adequacy, and investment diversification. It does not require DOL pre-approval of benefit changes; plans may adopt changes and then report them.

A terminal report must be filed regardless of the number of participants in the plan

Unlike standard Form 5500 filings where participant count determines the form to use, the terminal report must be filed by the plan administrator regardless of the number of participants when a plan is winding up its affairs.

Within 30 days of the request

Each participant and beneficiary is entitled to receive, upon written request, copies of collective bargaining agreements, trust agreements, contracts, or other instruments under which the plan is established. These documents must be furnished within 30 days after being requested.

The plan administrator

The course states that the legal burden for filing rests on the plan administrator. Filings are annual and consolidated for IRS and DOL.

Form 5558 must be filed before the end of the plan year, providing an extension of up to two and one-half months

A filing extension of up to two and one-half months is available if Form 5558 (Request for Extension) is filed before the end of the plan year. The timely filing of this form provides an automatic extension.

Yes, the postmark date determines timeliness; a return postmarked on the last day of the seventh month is considered timely even if it reaches DOL after the due date

The course states that if the return is mailed, the postmark date determines whether it was filed on time. In close situations, the plan administrator may wish to use registered or certified mail, as a receipt is conclusive proof the return was filed and delivered on that date.

The next succeeding business day

If the due date of the return falls on a Saturday, Sunday, or legal holiday, filing on the next succeeding business day is considered the due date. This rule applies for both normal due dates and extensions.

Reporting and disclosure information to DOL as required by ERISA §103, and serving as an annual report to IRS as required by IRC §6039D

Form 5500 serves a dual purpose: (1) reporting and disclosure information to DOL as required by ERISA §103, and (2) serving as an annual report to IRS as required by IRC §6039D. Filings are consolidated so that one form satisfies both agencies.

Statewide legal holidays in the state where the return is being filed

A 'legal holiday' means one in the District of Columbia but also includes statewide legal holidays in the state where the return is being filed. For example, a legal holiday recognized in Maine would extend the due date for a return filed with the IRS Center at Andover, Maine.

Schedule A and Schedule C

Figure 3-1 shows that plans with 100 or more participants must file Form 5500 along with Schedule A (insurance information) and Schedule C (service provider and trustee information). Plans under 100 participants file Form 5500-SF with no required schedules.

A general asset plan under 100 lives, because unfunded and general asset plans are deemed to be the same for exclusion purposes

Any general asset or fully insured plan under 100 lives is excluded from filing. Unfunded and general asset plans are deemed to be the same. A combination fully insured and general asset plan under 100 lives would also be excluded.

A Blue Cross or Blue Shield plan, as well as an HMO if properly licensed; the insurer must be a direct writer only

A fully insured plan for filing exclusion purposes includes a Blue Cross or Blue Shield plan as well as an HMO if such is properly licensed to do business. The insurer must be a direct writer only, meaning it directly provides the coverage rather than acting as an intermediary.

MEWAs are jointly ventured self-funded plans classified as multiple employer plans; the filer is the plan sponsor, not each participating employer

MEWAs are jointly ventured self-funded plans classified as multiple employer plans. The filer is the plan sponsor, not each participating employer. Employers related by 25% control are not MEWAs and may file as controlled employer filers.

As a multiple employer plan, because the sponsoring association assumes filing responsibility and the subscribing employer is only a bare-bones purchaser

This describes Case A of a group insurance arrangement: when the sponsoring association assumes responsibility for compliance filings and the subscribing employer is only a bare-bones purchaser, the plan is filed as a multiple employer plan.

Flexible spending accounts (both welfare and fringe benefit plans) and premium option plans (fringe benefit plans only); neither type has filing requirements

Two types of cafeteria plans are identified: (1) flexible spending accounts, which are both welfare plans and fringe benefit plans, and (2) premium option plans, which are only fringe benefit plans. There are no filing requirements for either type of plan.

It allows cafeteria plans (both FSAs and premium option arrangements) that withhold participant contributions to avoid being trusteed

DOL Technical Release §92-01 gives regulatory relief by allowing that cafeteria plans (both FSAs and premium option arrangements) that withhold participant contributions need not be trusteed. This is significant because without this relief, salary reduction contributions could trigger trust requirements.

Whenever there are benefits of the plan that are fully insured

Schedule A must be filed whenever there are benefits of the plan that are fully insured. It presents insurance information and is attached to Form 5500. It is used if any benefits under the plan are provided by an insurance company, insurance service, or similar organization.

In excess of $5,000; exceptions include plan employees paid under $1,000/month, employees doing plan work as part of their sponsor-employer job, employees of a service provider (vs. the provider itself), and persons whose compensation is on Schedule A

Schedule C must be completed for all plans where service providers are paid in excess of $5,000. Exceptions include: plan employees paid de minimis amounts (under $1,000/month), employees acting as sponsor's employees doing plan work, employees of a service provider (vs. the provider in toto), and persons whose compensation is disclosed in Schedule A.

Form 5500-SF

The course explicitly states that Schedule C is not to be filed with the Form 5500-SF. Schedule C is only filed by plans filing Form 5500 (plans with 100 or more participants).

Yes, this is common because such information is often not known to the insurer; the plan sponsor must complete the missing identifying information before attaching it to Form 5500

The course notes that often a Schedule A will be received absent the plan name, sponsor, EIN, and plan number because such information is not known to the insurer. The insurer must complete Part I and Part III and send the form to the plan sponsor in time for inclusion with the Form 5500.

Yes, so long as the insured plan years all end within the plan year set forth in the Form 5500

Multiple Schedule As may be affixed to a single Form 5500. This is true even if varying plan years are involved, so long as the insured plan years all end within the plan year set forth in the Form 5500.

Both direct and indirect compensation, where indirect includes items such as finders fees

Schedule C requires disclosure of both direct and indirect compensation. Indirect compensation includes items such as finders fees. Required information includes the provider's name, EIN, plan position, relationship, gross salary, fees or commissions, and provider code.

Yes, plans with fewer than 100 participants that are filing Form 5500 under the 80-to-120 rule are still required to include an accountant's report

Plans with fewer than 100 participants that are filing Form 5500 under the 80-to-120 participation rule are also required to include an accountant's report as part of the annual report. The filing form (5500 vs. 5500-SF) triggers the audit requirement, not the raw participant count.

Generally accepted accounting principles (GAAP) applied on a basis consistent with the preceding years

The accountant must clearly state his or her opinion as to whether the financial statements and schedules are presented fairly in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding years.

An enrolled actuary

The course states that in giving the opinion, the accountant is entitled to rely on the correctness of any matter certified by an enrolled actuary. This reflects the specialized nature of actuarial certifications and the division of professional expertise.

Statements prepared and certified by a regulated bank or insurance carrier, including those concerning plan assets held in bank trusts, custodial accounts, or separate accounts

An accountant's opinion is not required for any statements prepared and certified by a regulated bank or insurance carrier for inclusion in the annual report. This includes statements concerning plan assets held in any type of bank or insurance carrier trust or account.

The audit covers the plan in toto, including records, claims procedures, and compliance duties, not merely the plan assets

The course emphasizes that the scope of the audit of the accountant is to the plan in toto, not merely to the plan assets. The accountant must audit the records, the claims procedures, the compliance duties, etc., as well as the assets and related financial statements.

For the first of two consecutive plan years, one of which is a short plan year of seven months or less; the accountant may then conduct an examination and report on both plan years simultaneously

An employee benefit plan may defer the accountant's audit and report for the first of two consecutive plan years, one of which is a short plan year of seven months or less, until the end of the second plan year. The accountant is then permitted to conduct an examination and report on both plan years simultaneously.

A comparison of the plan's benefit levels to those of competing employers in the same industry

The accountant must address: plan description and changes, pension benefit changes, material commitments and contingent liabilities, party-in-interest transactions, plan termination priorities, tax ruling status, and any other matters needed for fair presentation. Competitive benchmarking of benefits is not among the required items.

The termination of service providers to self-funded plans

Part III of Schedule C lists information relative to the termination of service providers to self-funded plans. This disclosure requirement helps DOL monitor service provider changes that could signal problems with plan management.

Plan participants who serve on the plan's advisory committee without compensation

Providers listed for Schedule C include accountants, actuaries, TPAs, brokers, computer firms, consultants, custodians, investment advisers/managers, lawyers, printers, recordkeepers, trustees, pension advisers, and appraisers. Uncompensated plan participants serving in advisory roles are not service providers for this purpose.

Note the insurer's failure on Form 5500 in item 14

Per the Exhibit 3-A commentary on item 13b, if the insurer is not timely or refuses to provide a Schedule A, this should be noted on Form 5500 in item 14. The plan sponsor should not delay its own filing due to an uncooperative insurer.

By right, by request, or by inspection

The course identifies three methods of participant access to plan information: by right (documents automatically furnished), by request (documents furnished upon request for a reasonable charge), and by inspection (documents available for examination at the employer's principal offices).

By right: SPD, SBC, SMM, SAR, and notices; by request (for a charge): updated SPD, latest annual report, terminal report, collective bargaining agreement, trust agreement, and latest SMM

Documents furnished by right include the SPD, SBC, SMM, SAR, notices of plan actions, and notice of suspension of benefits. Documents available by request for a reasonable charge include the latest updated SPD, annual report, terminal report, collective bargaining agreement, trust agreement, and latest SMM.

At all times at the employer's principal offices

The plan administrator must make copies of documents available for examination by participants and beneficiaries at all times at the employer's principal offices. Documents include the SPD, latest annual report, collective bargaining agreement, and trust agreement.