Frequently Asked Questions
What is an ERISA Independent Fiduciary?
An ERISA Independent Fiduciary is a fiduciary who can manage the administration, investments and financial affairs of your Health & Welfare Plan or Qualified Retirement Plan – while remaining independent from your organization.
The independence that an ERISA Independent Fiduciary holds is key because ERISA was first passed to protect the interests of plan participants & beneficiaries over the interests of the employer or any individual him/herself. Having an Independent Fiduciary is a good safeguard to ensure plan participants & beneficiaries interests are truly being protected.
If you are considering working with an ERISA Independent Fiduciary, click here to learn more about ERISA Advisory Group.
Why do I need one?
In addition to the independent nature of the position an Independent Fiduciary holds, it is crucial to have a Plan Fiduciary who is a prudent expert in ERISA compliance and plan management.
Many Plan Sponsors will assume the role of the Named Fiduciary of the company plan him/herself, or will assign the role to random HR personnel or even employees of the company who do not realize (or understand) the responsibilities.
This can cause serious problems when it comes to the actual administration of the plan, because compliance errors often go unchecked and when the DOL or IRS find out, that person can be held personally liable for any civil or criminal penalties associated with those errors.
It is best to have an Independent Fiduciary who understands the ins-and-outs of ERISA compliance to protect your company from being out of compliance.
Contact ERISA Advisory Group today if you are interested in working with an Independent Fiduciary who specializes in ERISA compliance services.
What are my chances of being audited by the DOL?
In 2020, the DOL’s Employee Benefit Security Administration (EBSA) closed 1,122 civil investigations and collected $3.1 billion dollars in recoveries from enforcement actions. In addition, they closed 230 criminal cases and indicted 70 individuals. (See EBSA Fact Sheet from 2020)
With the current state of the healthcare environment due to COVID-19, we expect those numbers to go up as the Department develops increased monitoring and scrutiny towards ERISA Plans.
While there’s no way to tell the exact probability that you will face a DOL audit, you can think of it like this:
What are your chances of being pulled over on an interstate with tens of thousands of other motorists?
The reality is it does happen from time to time, and usually an officer can find something to give you a ticket for. The same goes for ERISA Plans, except when it’s the DOL, you’re looking at far worse than a speeding ticket!
If you would like to learn more about how EBSA decides to audit businesses so they can collect billions of dollars in fines, penalties & excise taxes, visit our ERISA Compliance Services page to learn more.
I recently received a letter or call from the DOL that I’m going to be audited. What should I do?
You need to have a discussion with an Independent Fiduciary immediately. The audit process can take months (if not years), and you are already certain to face legal fees and potential penalties for compliance errors in your Plan.
Luckily, if you hire the right Independent Fiduciary, you can get out in front of the DOL and start taking corrective actions now. While this won’t save you from having to pay potential fines, penalties and excise taxes on mistakes that have been detected – you can show the DOL that you are cooperating and taking your duty to protect participants & beneficiaries seriously from this point forward.
If you are currently facing a DOL audit, the ERISA Advisory Group offers DOL audit processing services to ensure your business is ERISA compliant to avoid penalties associated with an audit.
What’s the difference between a 402(a) Named Fiduciary and a 3(16) Plan Administrator?
A 402(a) Named Fiduciary is the top fiduciary in charge of your Health & Welfare or Qualified Retirement Plan. He or she is responsible for overseeing the actions of all other Plan Fiduciaries, and holds personal liability for the plan itself.
On the other hand, a 3(16) Plan Administrator is responsible for the day-to-day operations of the plan, while reporting to the 402(a) Named Fiduciary. He or she is typically in charge of maintaining Plan Documents and filing the necessary paperwork with the DOL, but also assumes a lot of personal liability for the plan.
Different types of ERISA Plan Fiduciaries, have differing levels of personal liability attached to each.
Will I be personally held liable if my plan is out of compliance with ERISA?
If you are a Plan Sponsor, Named Fiduciary, Plan Administrator or other Plan Fiduciary who offers advice or makes decisions on behalf of the plan – then you are subject to personal liability for the plan.
The biggest problem for business that offers Health & Welfare Plans or ERISA Covered Retirement Plans face is having fiduciaries who don’t know that they’re fiduciaries (i.e., they hold a level of personal liability for the plan and will be held accountable by the DOL if compliance errors are found.)
It’s essential to understand who qualifies as an ERISA Plan Fiduciary, and the level of personal liability attached to various fiduciary roles within your plan. The ERISA Advisory Group will ensure you fully comprehend all levels of liability, so you will choose the best plan for yourself or your business.
Who on my team is considered a Fiduciary?
Any person or persons who offer advice, make decisions or have control over your Health & Welfare or Retirement Plan are considered fiduciaries. (I.e., not just your 402(a) Named Fiduciary or 3(16) Plan Administrator).
Determining who qualifies as a fiduciary under ERISA is essential to crafting a competitive ERISA compliant plan.
What’s a Directed Trustee?
A Directed Trustee is a fiduciary who takes direction from other fiduciaries in the Plan. Directed Trustees do not have decision making authority on behalf of the plan, but they are responsible for certain reporting and financial matters.
Learn more about what an ERISA fiduciary directed trustee.
What’s an RFP and why do I need to do it?
A Request for Proposal (or RFP) is a process conducted to get project and price quotes from vendors who provide services to a Plan.
The RFP process is necessary for finding the best services for your participants & beneficiaries, at a reasonable price as required by ERISA.
ERISA Advisory Group offers Request For Proposal Compliance Services under ERISA backed by our more than 25 years of critical ERISA compliance experience including Request For Proposal Compliance.
How do you go about managing the RFP Process?
The ERISA Advisory Group offers RFP Management services for Health & Welfare and Qualified Retirement Plans.
After soliciting bids from a variety of service vendors in a specific industry, we take a look at all of the proposals and determine which deal best meets the needs of your Plan while falling within the “reasonable price” standards under ERISA.
My business is undergoing a Merger or Acquisition, can you help with that?
At the ERISA Advisory Group, we help buyers and sellers reconcile their Health & Welfare Plans and/or Qualified Retirement Plans under ERISA as part of their transaction during a Merger or Acquisition.
We follow a step-by-step process at the ERISA Advisory Group. Our mergers and acquisition compliance process is rooted in over two and a half decades of Mergers and Acquisitions Compliance under ERISA.
How do you develop a Health & Welfare Plan?
Different industries, and individual businesses, require unique solutions for the strategic design of their Health & Welfare Plan.
After decades of experience working with Health & Welfare Plans and Retirement Plans, we can figure out the best offerings and strategies to design your plan based on your company’s goals – while falling within the legal requirements for ERISA compliance.
We develop strategic ERISA compliant plans including Health & Welfare Plans.
How do you develop a Qualified Retirement Plan?
Over the years, many different types of Retirement Plans have entered the market to create the most favorable outcomes for employers and participants & beneficiaries alike.
The challenge became figuring out:
- Which type of plan do I offer based on my company’s structure & financial goals? And,
- How do I create the plan I want while staying compliant with ERISA and related laws & regulations?
Throughout our decades working with Retirement Plans, we’ve developed the answers to both of these questions across many industries and business situations.
The ERISA Advisory Group develops strategic Qualified Retirement Plans that are ERISA compliant.
How do you develop an Executive Compensation Plan?
Strong Executive Compensation Plans are great for attracting top talent to your team, and rewarding your most valued employees for their hard work and commitment to your business.
There are several considerations to keep in mind when developing an Executive Compensation plan that offers the highest earnings and best tax advantages for your executives, while staying ERISA compliant.
The ERISA Advisory Group offers a range of ERISA complaint Executive Compensation Plans to ensure the best fir for attracting sought after talent for your business.
What is a Form 5500 and why is it important?
Your Form 5500 is the most important document you have to disclose all of the financial details about your Health & Welfare Plan or Qualified Retirement Plan.
The Department of Labor looks at your Form 5500 to detect any potential compliance errors, and if they find any mistakes will not hesitate to spring into action and investigate your Plan.
To learn more about the common mistakes made when filling out a Form 5500 that could trigger a DOL audit of your Plan, click here to read more.
I missed the deadline for filing my Form 5500, what do I do?
The Department of Labor offers a Delinquent Filer Voluntary Compliance Program (DFVCP) for Plan Fiduciaries who miss the deadline for filing their Form 5500.
By participating in the DFVCP, you can potentially reduce your fines & penalties for filing late by taking corrective action.
If you missed the deadline for filing your Form 5500, contact ERISA Advisory Group.
What is a Prohibited Transaction under ERISA?
Prohibited Transactions are transactions made with plan assets involving “parties-in-interest” that violate the rules of ERISA.
These transactions are major red flags for the Department of Labor and could trigger an audit if reflected in your Form 5500 or other financial documents.
The ERISA Advisory Group specializes in Prohibited Transaction Compliance to ensure you avoid costly financial penalties.
What are the Prohibited Transaction Exemptions under ERISA?
Given the broad definition of Prohibited Transactions under ERISA, the law also provides a number of exemptions so you can operate your plan effectively.
These exemptions are important to keep in mind when designing, implementing and managing your plan so you can stay compliant with ERISA.
Contact ERISA Advisory Group today to learn more about Prohibited Transaction Exemptions under ERISA that you can take advantage of.
As a Fiduciary, I committed Prohibited Transactions because I didn’t fully understand the rules, how do I go about correcting this?
The Department of Labor offers a Voluntary Fiduciary Correction Program (VFCP) to assist Plan Fiduciaries with taking corrective actions on their own to potentially reduce fines and penalties for being out of compliance.
What is the Employee Benefits Security Administration (EBSA) and why is it important?
The Employee Benefits Security Administration (EBSA) is the agency within the US Department of Labor responsible for administering, regulating and enforcing the provisions of Title I of ERISA.
EBSA is the body that conducts audits of private and public companies that offer Health & Welfare or Qualified Retirement Plans that they suspect are not in compliance with ERISA.
Our ERISA Compliance Services ensures that your business is Title 1 compliant under ERISA.
If I have ERISA legal counsel, do I really need an ERISA Independent Fiduciary too?
The answer is Yes. While ERISA legal counsel is necessary to provide you with the legal guidance for setting up and operating a Health & Welfare Plan or Qualified Retirement Plan, having an ERISA Independent Fiduciary is also needed to maintain compliance.
Fiduciaries assume liability for managing the assets belonging to the plan, and are required by law to put the interests of participants & beneficiaries above their own or that of the company.
Having a prudent expert to make assume this level of personal liability, as well as making decisions on behalf of the administration, management and operations of the plan is needed in addition to legal counsel.
What’s the difference between a TPA and an ERISA Independent Fiduciary who acts as a 3(16) Plan Administrator?
A Third-Party Administrator or TPA provides “ministerial” functions to an ERISA Health & Welfare or Qualified Retirement Plan. (E.g., processing insurance claims on behalf of a company.)
On the other hand, an ERISA Independent Fiduciary is a prudent expert in ERISA legal compliance and strategic plan management. He or she assumes some level of personal liability for the plan by acting as a fiduciary.
A primary function of this fiduciary responsibility involved putting the interests of plan participants & beneficiaries above that of their own, their employer or any organization or individual.
Why is the ERISA Advisory Group better than other Independent Fiduciaries?
At the ERISA Advisory Group, we’re proud to have served clients across the United States with ERISA Health & Welfare and Retirement Plan design and compliance since 1995.
Our experience in this industry is what sets us apart. William Kropkof, Founder & President of the ERISA Advisory Group, worked for the Department of Labor for 7 years prior to founding his independent practice.
Now, our group brings this expertise into every Plan we look at. In fact, we look at the same items as the DOL when reviewing a plan to detect compliance errors and the necessary corrective actions to get back in good standing.
Learn more about ERISA Advisory Group to better understand why our more than two and a half decades of ERISA compliance experience makes us better than other independent fiduciaries. Then, contact ERISA Advisory Group. It will be the easiest decision you’ve made all year.
Do you have any training materials that can help my Plan Fiduciaries become more knowledgeable?
Yes. Our newsletter, ERISA Insider, is currently published once a month and focuses on a new topic about ERISA compliance and Fiduciary Responsibility.
We also offer Fiduciary Training to companies who want their Plan Fiduciaries to become more knowledgeable about ERISA, EBSA and the DOL – along with strategies and best practices for good reporting and keeping your plan legally compliant.
How do I get in contact with the ERISA Advisory Group?
If you would like to speak with an Independent Fiduciary at the ERISA Advisory Group, then contact ERISA Advisory Group to schedule a free consultation and get all of your questions answered.