Health & Welfare | Reporting & Disclosure
Form 5500
ERISA requires each plan to file Form 5500 by the end of the seventh month after the end of each plan year (extensions of time are available) unless the DOL has granted an exemption to this requirement. Under the DOL's regulations, certain employee welfare benefit plans are not required to file a Form 5500 (e.g., if the plan covers fewer than 100 participants at the beginning of the plan year and the benefits are paid either (i) exclusively from the employer's general assets, (ii) exclusively through insurance contracts or an HMO, or (iii) through a combination of the two). If a Form 5500 is required and the plan is funded through a trust, formal plan financial reports and an independent qualified public accountant's opinion may be required.
The failure to file a Form 5500 required by ERISA can result in a penalty imposed by the DOL of up to $1,100 per day with no maximum unless the penalty is excused based upon reasonable cause. Currently, the DOL has in effect an enforcement policy that calls for a penalty of $50 per day per plan for late filers and a penalty of $300 per day per plan up to $30,000 per year per plan for non-filers. Late filers may obtain relief from these penalties under the DOL's Delinquent Filer Voluntary Compliance (DFVC) Program under which late forms can be filed subject to a fixed penalty schedule that is less onerous than the penalties that might otherwise apply.
Summary Annual Report (SAR)
Each year, the plan administrator of a plan that is not exempt from filing a Form 5500 must provide a summary annual report (SAR) to the participants within nine months after the end of the plan year. In addition, a totally unfunded plan, under which the benefits are paid solely from the general assets of the employer, where there are no employee contributions, is exempt from the SAR requirement even if the plan administrator must file a Form 5500 because there are at least 100 participants. The SAR summarizes the information provided on the Form 5500 and tells the participants how to obtain a copy of the Form 5500. The requirements for a SAR are set forth in the DOL's regulations.
Summary Plan Description
ERISA requires that every plan be summarized in lay terms in a summary plan description (SPD). The specific requirements for the contents of an SPD are contained in regulations published by the United States Department of Labor (DOL). The SPD must be provided to each participant in the plan within 90 days after he or she becomes a participant. A copy of the SPD need not be sent to the DOL unless the DOL requests a copy. If a subsequent amendment to the plan results in a change in any of the information required to be in the SPD, a supplement to the SPD must be distributed to all participants within 210 days after the end of the plan year in which the change was adopted. In addition, if there is a material reduction in covered services or benefits provided under a group health plan, a summary of the change must be given to participants within 60 days after the adoption of the change (unless the employer provides such a description at regular intervals of not more than 90 days). If the plan has been amended, an SPD incorporating all amendments to the plan must be provided to the participants every 5 years. If the plan has not been amended, another copy of the SPD must be provided to the participants every 10 years.
The willful violation of the requirement to provide SPDs, SARs and certain other information requested by participants to the participants can result in a fine of up to $5,000, imprisonment for up to 1 year, or both if the person convicted is an individual. If the person convicted is not an individual (e.g., it is a corporation), the fine can be as high as $100,000. In addition, the failure to provide certain information requested by a participant or beneficiary within 30 days after a request can result in a civil penalty of up to $110 per day. This amount is payable to the participant or beneficiary involved.