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In Part 3, we talked about limiting your liability as a fiduciary.  Now let's talk about how rules affect your plan...


Employee Contributions:  If a plan provides for salary reductions from employees' paychecks for contribution to the plan or participants make payments directly, such as payment of COBRA premiums, the employer must deposit the contributions in a plan trust in a timely manner.

ERISA requires that participant contributions be deposited in the plan as soon as it is reasonably possible to segregate them from the company's assets, but no later than 90 days from the date on which the participant contributions are withheld or received by the employer.  If employers can reasonably make the deposits sooner, they need to do so.  For plans with fewer than 100 participants, salary reduction contributions deposited with the plan no later than the seventh business day following withholding by the employer will be considered contributed in compliance with the law.

Important Exceptions to ERISA's Trust Requirement:  For participant contributions to cafeteria plans (also referred to as Section 125 plans), the DOL will not assert a violation solely because of a failure to hold participant contributions in trust.

Other contributory health plan arrangements may obtain the same trust relief if the participant contributions are used to pay insurance premiums within 90 days of receipt.

Hiring Service Providers:  Hiring a service provider in and of itself is a fiduciary function.  When considering prospective service providers, an employer should provide each of them with complete and identical information about the plan and the desired services so that the employer can make a meaningful comparison.

Some actions fiduciaries need to consider when selecting a service provider include:

•  Getting information from more than one provider;

•  Comparing providers based on same information;

•  Obtaining information about the provider itself, including financial condition and experience with group health plans of similar size and complexity;

•  Evaluating information about the quality of the firm's services.

•  Ensuring that any required licenses, ratings or accreditations are up to date.

An employer should document its selection (an monitoring) process, and, when using an internal administrative committee, should educate committee members on their roles and responsibilities.

Coming soon - Part 5:  Continuing with Hiring Services Providers - Evaluating Fees

From LEGISLATIVE BRIEF Brought to you by The Bramlett Agency, March 2015, Zywave.

This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.  Readers should contact legal counsel for legal advice.


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