This month marks the 40th anniversary of ERISA, with its flurry of filings, forms, and the fiduciary obligations that mark today’s employee benefits. The Employee Retirement Income Security Act sets the administrative rules for pensions, 401(k)s, and most welfare plans that employers offer, from medical to severance programs.
How best to co-exist with these rules?
- Read your company’s plan booklets. These “summary plan descriptions” are not casual handbooks. They determine your employees’ claims for benefits. If they are not accurate, or are unclear, revise them.
- Make sure the plan booklet and every benefit communication includes the statement that the employer reserves the right to change or end the program at any time. This is particularly important for retiree benefits. And ensure that collective bargaining agreements reflect that the retiree welfare benefits described are provided only for the duration of the agreement.
- Take a look at the charges incurred by your company 401(k), and determine whether they are appropriate. For guidance, see http://www.dol.gov/ebsa/pdf/401kFeesEmployee.pdf
- Don’t make 401(k) matching contributions in employer stock.
- Obtain adequate fiduciary liability insurance. If an employer makes the final benefit and eligibility decisions for its plan, then it is the plan fiduciary. And it must make those decisions for the exclusive benefit of the plan’s participants, strictly according to the plan document. Obtain a bond to protect your company’s 401(k). http://www.dol.gov/ebsa/regs/fab2008-4.html
- Observe the deadlines for Form 5500 filings. http://www.dol.gov/ebsa/forms.html
And remember that an employer’s decision to start, change, or end any employee benefit program is a business decision. Under ERISA, employers are free to make all such decisions for their own best interests.