Does ERISA apply to group health plans?
Jul 13, 2018 · Mistakes An Employer Needs To Avoid When Starting A 401(k) Plan By Ary Rosenbaum, Esq. Too many plan sponsors would rather eat fish on an airplane flight than they would call an ERISA attor- ney.
What types of plans are subject to ERISA?
Jan 15, 2020 · A1: Yes, government and church plans do not need to comply with ERISA. Government plans generally include plans sponsored by public school corporations and state and local governments. All other plans must meet ERISA’s requirements, regardless of size. This includes both fully insured and self-funded plans, and plans sponsored by unions as ...
What is the difference between ERISA qualified and non-ERISA plans?
Oct 01, 2020 · So the plaintiffs’ counsel “knew they were facing an uphill battle from the outset of this case.” Even if she overlooked the plaintiffs’ failure to recognize the flaws in the expert witness’ opinions, Arguello said sanctions under U.S. Code Section 1927 would still be warranted. Section 1927 says, “Any attorney …
What is ERISA and how does it affect you?
May 10, 2022 · Plan sponsors must understand the intersection of claims procedures under the Employee Retirement Income Security Act (ERISA), and the mandate to keep individually identifiable health information confidential, under the Health Insurance Portability and Accountability Act (HIPAA). This understanding is particularly important when plan sponsors …
What is an ERISA fiduciary?
ERISA plan fiduciaries are obligated under ERISA to ensure that the total amount of compensation paid to a Plan Service Provider for its service to a plan is reasonable and not excessive. Both the federal courts and the U.S. Department of Labor take the position that if a Plan Service Provider receives revenue sharing payments attributable to a plan’s investment in a fund, then the Plan Service Provider’s compensation for plan-related services includes those revenue sharing payments. [2] Accordingly, the plan fiduciaries have an obligation under ERISA to understand and monitor revenue sharing payments made to a Plan Service Provider to ensure that the total amount of such payments, together with any other sources of compensation received by the Plan Service Provider (e.g., direct payments of fees by the plan, float, etc.) are not excessive.
What is revenue sharing?
Revenue -sharing payments are expenses for the mutual funds that pay them. Those expenses, like most fund administrative expenses, are reflected in the fund’s expense ratio. All else being equal, a fund that pays revenue sharing will have a higher expense ratio than a fund that does not.
Legal Background
Under ERISA Section 104 (b) (4), any participant or beneficiary (or their personal representative) may submit a written request for copies of the following plan materials:
Why Include a Cover Letter? What Should It Say?
As outlined above, under ERISA, plan sponsors are not required to provide any additional material when responding to a request for plan documents. However, it may pay off to include the following, additional information in a cover letter, when responding to participant requests:
Does ERISA cover group health plans?
One caveat, however, is that the ERISA doesn’t usually cover group health plans established or maintained by government organizations or religious institutions.
Is 401(k) an ERISA plan?
A 401k is an ERISA qualified plan because it is a corporate defined-benefit plan and therefore employer-sponsored. The only time this isn’t true is for employees who work for government agencies, religious institutions, or nonprofits. If your 401k is employer-sponsored, it’s typically an ERISA plan.
What does ERISA stand for?
Register. ERISA is an acronym frequently thrown around in the world of HR, but what does it mean? ERISA stands for the Employee Retirement Income Security Act. The law sets the standards for pension and Welfare plans to protect employees and their beneficiaries.
What is a simple IRA?
A Savings Incentive Match Plan for Employees (SIMPLE) is another employer-sponsored IRA plan. This type of account allows employers to contribute to the IRA established for their employees. The Department of Labor classifies SIMPLE IRAs as ERISA qualified because employers are involved in the plan.
What Is Revenue Sharing?
Revenue sharing generally refers to payments made by mutual funds to service providers (“Fund Service Providers”) to compensate them for the services they provide for those funds. For example, a mutual fund may pay sales and service fees (collectively referred to as “12b-1 fees”) to a Fund Service Provider as considerati…
Impact on Fund Expense Ratio
- Revenue -sharing payments are expenses for the mutual funds that pay them. Those expenses, like most fund administrative expenses, are reflected in the fund’s expense ratio. All else being equal, a fund that pays revenue sharing will have a higher expense ratio than a fund that does not. 401(k) plan fiduciaries have an obligation under ERISA to take cost, including expense ratios, int…
The Excessive Compensation Issue
- ERISA plan fiduciaries are obligated under ERISA to ensure that the total amount of compensation paid to a Plan Service Provider for its service to a plan is reasonable and not excessive. Both the federal courts and the U.S. Department of Labor take the position that if a Plan Service Provider receives revenue sharing payments attributable to a pla...
The Allocation Fairness Issue
- Generally, the cost of recordkeeping services varies based upon the total number of participants in a plan. For that reason, plan fiduciaries generally try to allocate the cost of recordkeeping services among all plan participants uniformly so that each participant bears the same amount of recordkeeping cost regardless of the size of the participant’s account balance and regardless of …
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