Offering a retirement plan for your employees can greatly improve the quality of the staff that you are bringing in to the workplace. In fact any kind of benefit such as healthcare or a retirement plan not only brings in the best, it can also help to keep a happy workforce, retain the high quality team that you have, as well as helping your company to forge a great reputation for itself. Naturally within a retirement plan benefit there is quite a bit of compliance to get your head around and today we are going to focus on ERISA, and some of the burning questions which you may have.
What Is ERISA?
ERISA stands for the Employee Retirement Income Security Act, it was introduced in 1974 and the idea of the act is that it will protect the assets and funds of Americans in order to ensure that when they do retire, their retirement package is there. In a nutshell ERISA is the ombudsman of all retirement plans that an employer may offer and all plans will be decided upon and have its details set out by ERISA, which is the law that sets the minimum terms and standards.
What is a Wrap Document?
An ERISA wrap document is considered as a drafting device which is used to support documentation that already exists. In essence this is a document which provides accurate information which is required by ERISA, and ‘wraps’ itself around a third party contract or an insurance document. This is important for businesses because few policies and contracts actually contain the specific information which ERISA requires. The wrap document will ensure that any information featured within these contracts or policies do meet the requirements of ERISA.
What Benefits Does ERISA Offer?
It should be remembered that ERISA will not tell you what benefits are available or how many of them, this law only sets out the parameters for managing the majority of employer-sponsored health plans and pensions. What ERISA does require however is that you a fully transparent when offering information and these are the minimum requirements for employers.
- File an annual report with federal government
- Meeting the standards which have been detailed in the Employee Retirement Income Security Act
- Ensuring that a summary plan is providing to employees which will detail information about the plans copays, deductibles and premiums
What Else To Know About ERISA?
There are two different groups for ERISA, self-funded and fully insured, self-funded is of course paid for by the employer whereas fully insured will use a 3rd party to offer the plan. Within each group there are differing laws and liabilities which you shod be aware of before you decide upon either one. If you are in any doubt about this then make sure that your company has consulted professional legal help in order to stay in line with federal law.