1. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company1 What is it? Employee Retirement Income Security Act of 1974— broad legislation governing requirements for employee benefit and retirement plans ERISA includes broad reporting and disclosure requirements for many plans Divides plans into 2 types: pension plans and welfare plans

2. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company2 Government plans Church plans Plans outside U.S. Unfunded excess benefit plans Plans maintained solely to comply with workers compensation, unemployment compensation and disability insurance laws Plans Exempt from ERISA

3. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company3 Much broader term under ERISA than under Internal Revenue Code Means any plan, fund or program of employer, employee organization (e.g., union) or both, that: –Provides retirement income to employees, or –Results in deferral of income by employees for periods extending to termination of employment or beyond “Pension Plan” under ERISA

4. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company4 ERISA definition includes all qualified pensions and profit sharing plans; also includes some nonqualified deferred compensation plans ERISA pension plan generally is any employee benefit plan that involves deferral of an employee’s compensation to retirement or later date “Pension Plan” under ERISA

5. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company5 Labor regulations give partial exemptions or special treatment from ERISA requirements for: Severance pay plans if 1)Payments do not depend directly or indirectly on the employee’s retiring 2)Total payments under the plan do not exceed twice the employee’s total annual compensation during the year immediately preceding the separation from service 3)All payments to the employee are completed within 24 months of separation from service. Regulatory Exemptions

6. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company6 Plans complying with requirements are exempted from reporting and disclosure requirements for pensions, but may be subject to more limited requirements for welfare benefits. Regulatory Exemptions

7. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company7 Labor regulations also give partial exemptions or special treatment from ERISA requirements for: –Supplemental payment plans that provide extra benefits to retirees to counteract inflation, and –Employer-facilitated IRAs (such as SEPs and SIMPLE IRAs) and Section 403(b) tax sheltered annuities Regulatory Exemptions

8. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company8 Reporting and disclosure requirements: –Applicable to all pension plans (all qualified plans and some nonqualified) –Timing, description and details are included in compliance chart on Figure 12.1 (pages 116-119) Pension Plan Reporting and Disclosure

9. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company9 Most important reporting and disclosure requirements: 1)Summary Plan Description (SPD): must be provided to participants within 120 days after plan established or 90 days after participant enters plan. Provides description of major plan provisions. 2)Annual Report (Form 5500 Series) Must be filed with IRS each year by end of seventh month after plan year ends. Pension Plan Reporting and Disclosure

10. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company10 Most important reporting and disclosure requirements: 3)Summary Annual Report. Must be provided to participants each year within nine months after end of plan year; provides information from annual report. 4)Individual Accrued Benefit Statement Must be made available to participants within 30 days of request, and only once per year. Good practice to offer to all participants since it communicates value of plan benefits. Pension Plan Reporting and Disclosure

11. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company11 Title IV of ERISA contains plan termination insurance provisions Imposes various reporting and disclosure requirements on defined benefit pensions Reporting and disclosure provisions help the Pension Benefit Guaranty Corporation insure and protect benefits Title IV Reporting and Disclosure Requirements

12. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company12 Any plan, fund or program established or maintained by an employer, employee organization, or both providing one of the following either through insurance or otherwise: –Medical, surgical, hospital care –Sickness, accident, disability benefits “Welfare Plans” under ERISA

13. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company13 Any plan, fund or program established or maintained by an employer, employee organization, or both providing one of the following either through insurance or otherwise: –Apprenticeship or other training –Day care centers –Scholarship funds –Prepaid legal services –Certain other plans described in federal labor law “Welfare Plans” under ERISA (continued)

14. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company14 Labor Regulations make certain practices and benefits exempt from ERISA reporting and disclosure: –Overtime, shift pay and holiday premiums –Sick pay, vacation pay, holidays, military and jury duty, sabbatical paid out of general assets of the employer (i.e., not funded in advance) Regulatory Exemptions: Welfare Plans

15. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company15 Practices and benefits exempt from ERISA reporting and disclosure: Recreational or dining facilities or first aid centers on employer’s premises Holiday gifts Voluntary group insurance offered by an insurer, not sponsored by employer Unfunded tuition reimbursement Regulatory Exemptions: Welfare Plans

16. ERISA Reporting and Disclosure Chapter 12 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company16 Reporting and disclosure requirements less onerous for welfare plans than for pension plans. Small welfare plan exemption: no Form 5500 annual report filing requirement if welfare plan has fewer than 100 participants and is fully insured or is paid out of general assets on a “pay as you go” basis. –Plans satisfying small welfare plan exemption also do not need to file a Summary Plan Description. –Many forms may be obtained at IRS website www.irs.gov Welfare Plan Reporting and Disclosure