Employee Retirement and Income Security Act (ERISA)

29 U.S.C. § 1001 et seq.; 29 C.F.R. § 2509.75-2 et seq., 29 C.F.R. Part 2510 (contains definitions of employee welfare benefit plan, employee pension benefit plan, etc.), 29 CFR Part 2520 (rules for reporting and disclosure), 29 C.F.R. § 2530.200A (minimium standards) et seq., and 29 C.F.R. § Part 2550 (Fiduciary Responsibility)

Federal tax law on ERISA is codified at I.R.C. §§ 401(a), 403(b), 410(b) and 457. Federal labor law on ERISA is codified at 29 U.S.C. § 1001 et seq. Reporting and disclosure requirements and responsibilities are set forth in 29 C.F.R. Parts 2509, 2510, 2520, 2530 and 2550. Interpretive bulletins explaining the Act are contained at 29 C.F.R. § 2509.75-2 et seq.

ERISA establishes standards of conduct, responsibility and obligations for fiduciaries of employee benefit plans. This includes various health benefits, disability benefits, unemployment compensation benefits, retirement plans and income deferral programs. The law also limits the remedies available to workers. A person in an employer-sponsored health care plan may recover the benefits and obtain an injunction clarifying the right to future benefits, but the law does not allow compensation for lost wages, death or disability, pain and suffering, or emotional distress.

ERISA preempts state law relating to pension or welfare benefit plans. Government benefit plans, in contrast, are regulated by state law.

For an overview of ERISA in general, see Introduction to Employee Benefits Law, by Michael Melbinger, posted online by Winston and Strawn (under Resource Library, Articles, Employee Benefits).

Reporting and Disclosure Requirements:

Administrators of Employee Benefit Plans must do the following:

  • Furnish participants and beneficiaries with a summary plan description (SPD) which explains in clear language terms, rights, benefits, and responsibilities. The Plan administrator must automatically furnish to each participant of an employee welfare or pension benefit plan and to each beneficiary receiving benefits under a pension plan a copy of the summary plan description, and all modifications and changes referred to 29 USC 1022(a) within 90 days after he/she becomes a participant, or in the case of a beneficiary, within 90 days after he/she first receives benefits, or if later, within 120 days after the plan becomes subject to ERISA [29 USC 1024(b)]. A participant does not become a covered participant until enrolled, but many plans simply give SPDs to all eligible employees, whether or not enrolled, for ease of administration.
  • Upon written request, furnish SPDs and other documents as requested to any participant or beneficiary receiving benefits under a pension plan within 30 days. A reasonable charge for copying can be made in this instance.
  • Once every five years furnish to each beneficiary receiving benefits under a pension plan, and each participant in an employee benefit plan, an updated SPD that incorporates all plan amendments made within last five years, unless no such amendments have been made, in which case the SPD shall be given out every tenth year of the plan.
  • Furnish participants (and beneficiaries receiving benefits under a pension plan) a summary of any material changes to the plan or changes to the information contained in the SPD (within 60 days of the modification or change if it is a material reduction in covered services or benefits of a group health plan, otherwise within 210 days after the end of the plan year in which the change is adopted.)
  • Within 210 days after the close of the fiscal year of the plan, the administrators shall furnish to each participant, and to each beneficiary receiving benefits under a pension plan, a copy of the statements and schedules, for such fiscal year, described in subparagraphs (A) and (B) of section 1023(b)(3) and such other material (including the percentage determined under section 1023(d)(11) of this title) as is necessary to fairly summarize the latest annual report.
  • The administrator of an employee benefit plan must file a form 5500 within 210 days after the close of the plan year. Thus, if the plan year is the same as the calendar year, and ends Dec. 31, then the filing deadline is July 31 of the next year. An extension of the filing deadline of up to two-and-a-half months can be obtained by using form 5558. If the plan year and tax year are the same, and you obtain an extension for filing the institution's tax return, then the deadline for the 5500 is automatically extended as well. For those plans that end on Dec. 31, the filing date is July 31. See the TIAA-CREF 5500 ERISA Reporting web page for guidance on filing 5500 forms.

On April 4, 2002 the IRS suspended the 6039D filing requirement for fringe benefit plans (schedule F of annual information returns) under Code sections 125, 127 and 137. See the

April 4, 2002 news release

. on this which contains a link to Notice 2002-24. Note that this suspension does not relieve plan administrators of the requirement to file Form 5500s under ERISA. See Form 5500 Filing Tips on the IRS web page.

See also

Reporting and Disclosure

by W. Fulton Broemer, Broemer and Associates, LLC. This is an excellent summary of Form 5500, the Summary Annual Report, Summary Plan Description, and other topics.

Mandatory Electronic Filing of 5500s to Begin in 2010: Seyfarth Shaw 9-30-2009 Summary of new Rule.

Beginning January 1, 2010, all 5500s must be filed electronically. In addition, The Pension Protection Act of 2006 requires each sponsor of a

defined benefit

pension plan that maintains an intranet website “for the purpose of communicating with employees and not the public” to post portions of the plan’s Form 5500.

Summary Plan Description (SPD) Requirements

The Department of Labor issued a final rule (65 Fed. Reg. 70,225, Nov. 21, 2000) amending the requirements as to what must be in summary plan descriptions of pension and welfare plans.

The overall effective date of the regulation is January 20, 2001. Some of the changes in the requirements do not become effective until the first day of the second plan year beginning after January 20, 2001 (for most plans January 1, 2003).

The following requirements are addressed in the final rule. It is important to note that many of these requirements are not new, and much of what is appears below is a clarification of existing requirements under interim rules.

Note, too, that this is not an exhaustive list of what must be in the SPD. For a complete list of SPD requirements (starting with the name of the plan; the name and address of the employer; the name, business address and telephone number of the plan administrator; etc.), see 29 C.F.R. § 2520.102-3. The regulations also identify what must be in the SPD for welfare benefit plans (which includes group health plans) and for pension benefit plans. The first page of text in an SPD must clearly identify the class of participants and beneficiaries for which the SPD was prepared and the plan’s coverage of other classes.

Group Health Plan SPDs must contain the following information:

  • What the participant or beneficiary must pay, in terms of premiums, deductibles, coinsurance, and co-payment amounts.
  • Any annual or lifetime caps or other limits.
  • Preventive services covered by the plan, such as membership in a health club.
  • Description of what drugs are covered under the plan, and exclusions.
  • Any limitations on coverage for medical tests, devices and procedures.
  • Description of how the network services works, and what coverage exists for out of network.
  • Conditions and requirements for primary care and specialty physicians.
  • Emergency medical care authorization requirements.
  • Utilization review or pre-authorization requirements.
  • Description of any plan provisions regarding the disposition of plan assets upon termination.
  • Required COBRA information (if done correctly, this can also satisfy COBRA requirements at the same time).
  • Information regarding maternity stays under the Newborns’ and Mothers’ Health Protection Act of 1996, and any state law requirements.
  • A description of any fees or charges that may be imposed on a participant or beneficiary.
  • A statement of ERISA rights (a model statement is provided in the new regulations).

In the case of plans with provider networks, the listing of providers may be furnished as a separate document that accompanies the plan’s SPD, provided that the SPD contains a general description of the provider network and provided that the SPD contains a statement that the provider lists are furnished automatically, without charge, as a separate document.

In the preamble to the regulation the Department notes the following:

It is important to note, however, that the Department did not intend … to be construed as requiring the SPD to list each and every drug, test, device, or procedure covered by a group health plan. Rather … intended to ensure that SPDs adequately inform participants and beneficiaries whether and under what circumstances the benefits … will or will not be covered by the plan, and to direct participants and beneficiaries as to where additional information may be obtained, free-of-charge, about plan coverage of a specific benefit, i.e., a particular drug, treatment, test, etc.

Pension and Welfare Plan SPDs must contain, in part, the following:

  • The type of plan, e.g., 401(k), 404 (c), defined contribution, etc.
  • A description and explanation of the plan provisions for determining years of service for eligibility to participate, vesting, breaks in service, and years of participation for benefit accrual.
  • Circumstances that will result in a loss of benefits.
  • Plan authority to terminate the plan, or amend or eliminate benefits.
  • Benefits, rights and obligations of participants and beneficiaries upon termination of the plan, elimination of benefits, or provisions relating to vesting.
  • Allocation and distribution of assets upon termination of the plan.
  • A statement as to whether benefits of the plan are insured under Title IV of ERISA, and if insured, a description of the pension benefit guaranty provisions of Title IV and a statement indicating that further information can be obtained from the plan administrator or the Pension Benefit Guaranty Corporation.
  • A description of any fees or charges that may be imposed on a participant or beneficiary.
  • The regulation contains model language that can be used to satisfy required notification of ERISA rights, including language on COBRA continuation coverage and HIPAA provisions. See 65 Fed. Reg. at 70,243.

Again, this not a complete list of what must be included in the SPD.

For a complete list of SPD requirements, see 29 C.F.R. § 2520.102-3.

Michelle's Law, Public Law 110-381

This new law amends ERISA and is effective for plan years on or after October 9, 2009. The law requires group health plans to extend dependent coverage when a college student would lose eligibility because of a medically necessary leave of absence. The student has to be full-time until the first day of the leave and must be medically certified by a treating physician. See the Mercer Update dated 2/11/09 for a really excellent summary of the new law.

Annual Reporting and Disclosure, Final Rule, 72 Fed. Reg. 64709, Nov. 16, 2007

The new reporting/audit requirements apply to IRC 403(b) plans subject to Title I of ERISA, similar to any other tax-qualified retirement/pension plans. These new audit/reporting requirements, via

Form 5500, contain certification via an annual audit and an auditor opinion. A "large" plan (those with 100 or more participants at the beginning of the plan year) must obtain the audit/opinion on the soundness of the financial operation of the plan, although some relief may be available via a "limited-scope" audit per 29 CFR Sec. 2520.103-8. Also, for those plans with fewer than 100 participants, a small plan audit waiver is available per 29 CFR Sec. 2520.104-46. These revisions to the DOL regs were coordinated with the IRS when the final IRC 403(b) regs were prepared/issued.

To avoid regulation under Title I of ERISA as an employee pension benefit plan, the DOL has issued guidance for the "safe harbor" (29 CFR Sec. 2510.3-2(f)), also available at the DOL website in a 6-page PDF.

Write up of new rule courtesy of Sean P. Scally, University Counsel and Tax Attorney, Vanderbilt University and Medical Center

Note that some of the forms revisions apply on a transitional basis for the 2008 reporting year before all of the form revisions are fully implemented as part of the switch under the ERISA Filing Acceptance System (EFAST) to a wholly electronic filing system for the 2009 reporting year. The current effective date of the electronic filing requirement under 29 CFR 2520.104a-2 also is being postponed in this document to apply to plan years beginning on or after January 1, 2009.

CHIP Reauthorization Act and Group Health Plan Enrollment, Notice and Disclosure Obligations

The sponsor of a group health plan must, commencing April 1, 2009 allow employee and dependents who are eligible but not enrolled for coverage to enroll in two additional circumstances:

  1. The employee’s or dependent’s CHIP or Medicaid coverage is terminated due to loss of eligibility
  2. the employee or dependent becomes eligible for a subsidy under Medicaid or CHIP.

The employee must request coverage within 60 days of the termination from assistance. Plan documents will have to be reviewed and amended. Notice requirements on this new rule will be developed by HSS by Feb. 4, 2010, and plans will have to distribute the notices during the first plan year beginning after the notices are first issued (so January 1, 2011 for calendar year plans). The penalty for non-compliance is $100 for failure to comply with the notice/disclosure requirements. The $100 penalty applies to each violation per participant or beneficiary. See the Seyfarth Shaw One Minute Memo (2/18/09) on this topic as well as the Ford and Harrison Legal Alert.

Revision of Annual Information Return/Reports, 72 Fed. Reg. 64731

(Nov. 16, 2007)

This document contains revisions to the Form 5500 Annual Return/Report forms, including the Form 5500 Annual Return/Report of Employee Benefit Plan and a new Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan (Short Form 5500 or Form 5500-SF), filed for employee pension and welfare benefit plans under the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Internal Revenue Code of 1986, as amended (Code).

Required contents of the annual report can be found at 29 CFR § 2520.103-1.

Field Assistance Bulletin 2004-1

issued by the U.S. Department of Labor on April 7, 2004: Issue: Whether Health Savings Accounts established in connection with employment based group health plans constitute "employee welfare benefit plans" for purposes of Title I of ERISA.

Recordkeeping Requirements:

In general, plan administrators are required to keep necessary information and data under Section 107 of ERISA for a period of six (6) years after the filing date of the documents. Section 209 requires employers to keep records of the benefits to which a participant is entitled.

ERISA for higher education attorneys who are not ERISA specialists

Here are some things you might not know about ERISA if you were not practicing in this area as a specialist.

Section 117 and section 127 tuition assistance plans will generally not be ERISA covered plans if the following statutory defintion is met. 29 CFR §2510.3-1 provides, in pertinent part:. . . .

(k) Unfunded scholarship programs. For purposes of title I of [ERISA] and this chapter, the terms "employee welfare benefit plan" and "welfare plan"shall not include a scholarship program, including a tuition and education expense refund program, under which payments are made solely from the general assets of an employer or employee organization.

29 CFR 2520.104b-10 requires the Plan Adminstrator to send the annual reports for welfare benefit plans (as opposed to pension benefit plans) to all participants. Since the ERISA code defines participant to include those eligible to participate, you need to send the Summary Annual Reports for the welfare benefit plans to those who are participants and to those eligible to participate. However, you do not have to welfare benefit plan Summary Annual Reports to beneficiaries, which differs from the pension plan SAR rule.

§ 2520.104b-10 Summary Annual Report.

Obligation to furnish. Except as otherwise provided in paragraph (g) of this section, the administrator of any employee benefit plan shall furnish annually to each participant of such plan and to each beneficiary receiving benefits under such plan (other than beneficiaries under a welfare plan) a summary annual report conforming to the requirements of this section. Such furnishing of the summary annual report shall take place in accordance with the requirements of §2520.104b-1 of this part.

Final Rules Relating to Use of Electronic Communication and Recordkeeping Technologies by Employee Pension and Welfare Benefit Plans, 67 Fed. Reg. 17264

(April 9, 2002) Effective Oct. 9, 2002.

These rules establish a safe harbor to which all pension and welfare benefit plans covered by Title I of ERISA may satisfy their obligations to furnish summary plan descriptions, summary annual reports, and summaries of material modifications by using electronic media. The rules also provide standards concerning the use of electronic media in the maintenance and retention of records required by sections 107 and 209 of ERISA.The regulations require certain conditions to be met in order for use of electronic distribution to meet the legal requirements. First, the plan administrator must take "appropriate and necessary" measures to make sure the plan participant actually receives the transmitted information, and take steps to ensure the confidentiality of personal information . Second, the electronically delivered documents must be prepared and furnished in a manner that is consistent with the style, format and content requirements applicable to the particular document. Third, recipients must be advised of the nature of the document being sent(e.g., the attached document describes changes in the benefits provided by your plan) and of the right to request and obtain a paper version of such document. Fourth, upon request, the participant, beneficiary or other individual must be furnished a paper version of the electronically furnished documents. Specific record maintenance and retention requirements also apply.

Selected Case Law

Larue v. Dewolff, Boberg and Associates, Inc.

U.S. Supreme Court, decided Feb. 20, 2008 (No 06-856)

Held: Although §502(a)(2) of ERISA (29 USC 1132(a)(2))does not provide a remedy for individual injuries distinct from plan injuries, it does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account. This was in the context of a defined contribution benefit plan. See

Supreme Court ERISA Decision could open doors to Broader Claims and Relief

by Jackson Lewis.

Black and Decker Disability Plan v. Nord (No. 02-469)

In this case, the Supreme Court found a benefits plan administrator was not required under ERISA to give preference to the opinion of the treating physician (the "treating physician rule") for the purpose of a disability determination under an employee benefits plan under ERISA.