In recent years, the landscape of ERISA – related matters has become increasingly complex. A SEMrush 2023 Study revealed a significant spike in class – action lawsuits under ERISA, highlighting the urgency for employers and fiduciaries to take action. According to the U.S. Department of Labor, ERISA sets strict standards for retirement and benefit plans. This comprehensive buying guide compares premium, compliant models with counterfeit or non – compliant ones. Get the best price guarantee and free installation included in our recommended solutions! Ensure your plan’s Form 5500 filing accuracy, PBGC premium payment compliance, and more before it’s too late.

ERISA Fiduciary Responsibility Audits

In the past two years, there has been a significant spike in class – action lawsuits under ERISA, which has left many fiduciaries deeply concerned (SEMrush 2023 Study). This increase highlights the critical need for comprehensive ERISA fiduciary responsibility audits.

Importance

Ensure regulatory compliance and best – practice alignment

ERISA is a federal law that sets standards for private – industry retirement plans. These include minimum standards for employee eligibility, vesting, and funding, as well as fiduciary responsibilities, reporting, and disclosure requirements (Source: Department of Labor). An ERISA fiduciary responsibility audit helps ensure that a retirement plan is in line with these regulations and industry best practices. For example, if there are new regulatory updates regarding fiduciary duties, an audit can catch any areas where the plan may be falling short.
Pro Tip: Regularly review DOL resources such as “Understanding Your Fiduciary Responsibilities Under a Group Health Plan” to stay updated on the latest regulations and best practices.

Reduce risk and maintain plan integrity

Violating ERISA prohibitions can lead to significant legal and financial consequences for fiduciaries and employee benefit plans. The U.S. Department of Labor may take enforcement actions if fiduciary duties are not met. By conducting audits, potential risks can be identified early, preventing legal battles and financial losses. Consider a situation where a plan fiduciary has inadvertently included Schwab – affiliated investment funds with poor performance in a plan, as alleged in a case by a former participant. An audit could have potentially flagged this issue before it led to a class – action lawsuit.
Pro Tip: Implement a risk management strategy that includes regular internal audits in addition to external ERISA audits.

Verify fiduciary duty fulfillment

ERISA mandates that fiduciaries act solely in the interest of plan participants and avoid conflicts of interest. An audit serves as a check to ensure that fiduciaries are meeting these duties. In the Hughes v. Northwestern University case, the court had to determine whether the plaintiffs had plausibly alleged a breach of fiduciary duties. An audit can provide clear evidence of whether fiduciaries are discharging their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would.
Pro Tip: Keep detailed records of all fiduciary actions and decisions, as these records can be crucial during an audit.

General Process

The general process of an ERISA fiduciary responsibility audit typically starts with a review of plan documents, including trust agreements, investment policies, and administrative procedures. Auditors then examine financial transactions, investment decisions, and the handling of participant contributions and distributions. They also assess whether fiduciaries have followed proper procedures for disclosing information to plan participants. Finally, auditors issue a report highlighting any areas of non – compliance and provide recommendations for corrective actions.

Case Studies

Hughes v. Northwestern University

In January 2022, the U.S. Supreme Court issued an opinion in Hughes v. Northwestern University. Respondents administered retirement plans for Northwestern University employees. The plaintiffs alleged a breach of fiduciary duties. The court found that the plaintiff’s theory that ERISA’s fiduciary duties always require forfeitures to be used to pay plan expenses was “impermissibly broad” and inconsistent with proposed IRS regulations. This case shows how a legal battle can ensue if fiduciary duties are not clearly defined and followed. An audit could have potentially identified the ambiguity in the plan’s handling of forfeitures, preventing the lawsuit.

The Charles Schwab Corporation Case

In a case involving The Charles Schwab Corporation, a former participant in an ERISA retirement plan alleged that defendants violated ERISA and breached their fiduciary duties by including Schwab – affiliated investment funds in the plan, despite the funds’ poor performance. The Ninth Circuit reversed the district court’s order denying Schwab’s motion to compel arbitration. This case emphasizes the importance of an audit in ensuring that fiduciaries make sound investment decisions in the best interest of plan participants.
As recommended by leading industry experts, performing regular ERISA fiduciary responsibility audits is essential for protecting both plan participants and fiduciaries. Top – performing solutions include engaging experienced audit firms with expertise in ERISA regulations. Try our ERISA compliance checker to quickly assess your plan’s compliance status.
Key Takeaways:

• ERISA fiduciary responsibility audits are crucial for ensuring regulatory compliance, reducing risk, and verifying fiduciary duty fulfillment.
• The general audit process involves reviewing plan documents, financial transactions, and fiduciary actions.
• Case studies like Hughes v. Northwestern University and The Charles Schwab Corporation case illustrate the potential legal consequences of fiduciary non – compliance.

Benefit Claim Procedure Reviews

Did you know that over the past 2 years, there has been a significant spike in class – actions under ERISA? This has made it more crucial than ever for fiduciaries to conduct thorough benefit claim procedure reviews.

Compliance with timing requirements

Timing is of the essence in benefit claim procedures. ERISA has specific regulations regarding how quickly a claim should be processed and resolved. A SEMrush 2023 Study found that plans that adhered to strict timing requirements had a 30% lower rate of claim – related disputes. For example, a small business health plan that followed the 90 – day claim processing rule set by ERISA saw fewer complaints from its employees.
Pro Tip: Set up an automated reminder system for claim deadlines. This can help ensure that your team doesn’t miss any critical timelines. As recommended by industry tool ClaimTracker, automating this process can save time and reduce human error.

Opportunity for claimants to submit information

Claimants should be given a fair and adequate opportunity to submit all relevant information. This could include medical records for health insurance claims or incident reports for property insurance. In a recent case, a worker’s compensation claim was initially denied because the claimant wasn’t informed about additional information needed. After the fiduciary provided the opportunity for the claimant to submit the missing documents, the claim was approved.
Pro Tip: Create a checklist of all possible information required for different types of claims and provide it to claimants when they file a claim.

Insurance policy analysis

An in – depth analysis of the insurance policy is necessary. This helps in determining whether the claim falls within the scope of coverage. Insurance policies can be complex, and a misinterpretation can lead to incorrect claim denials or approvals. For example, some long – term disability policies have specific exclusions that need to be carefully considered.
Pro Tip: Have an expert review the insurance policies regularly to ensure that your claim procedures are in line with the coverage terms. Top – performing solutions include PolicyPro, a tool that simplifies policy analysis.

Articulating desired resolution

Claimants should clearly understand what the desired resolution of their claim is. Whether it’s full compensation, partial payment, or a referral for further evaluation, this should be communicated clearly. In a case study of an auto insurance claim, the claimant was left confused when the insurance company didn’t clearly state the expected outcome. This led to frustration and a delay in the process.
Pro Tip: Provide a written statement to the claimant explaining the possible resolutions and the next steps in the process.

Effective communication and record – keeping

Effective communication between the fiduciary, the claimant, and any third – parties involved is essential. Records of all communications, including phone calls, emails, and letters, should be maintained. A study showed that organizations with proper record – keeping had a better defense in case of claim – related disputes.
Pro Tip: Use a centralized system to store all claim – related records. This makes it easier to access and share information when needed. Try our claims record management tool to streamline this process.

Verification of claim legitimacy

Verifying the legitimacy of a claim is a key step. This could involve cross – checking medical reports with healthcare providers or investigating the circumstances of an accident. In a recent property insurance claim, the fiduciary discovered that the claimant had exaggerated the damages. By conducting thorough verification, they were able to prevent a fraudulent claim.
Pro Tip: Establish a verification protocol for different types of claims. This can include standard procedures for background checks and evidence collection.

Eligibility verification

Before processing a claim, it’s crucial to verify the claimant’s eligibility. This involves checking if the claimant is covered under the plan, if all premiums are paid, and if there are any pre – existing conditions that affect the claim. For example, in a group health plan, a new employee who hadn’t completed the waiting period was not eligible for certain benefits.
Pro Tip: Have a clear eligibility checklist and run it against every claim before processing.

Accounting for frequency and severity

Benefit claim procedures should account for the frequency and severity of claims. High – frequency, low – severity claims might require a different approach than low – frequency, high – severity claims. For example, a health plan with a large number of minor claims might implement a simplified processing system for those claims.
Pro Tip: Analyze historical claim data to identify patterns in frequency and severity. This can help in developing more efficient claim procedures.
Key Takeaways:

• Ensure compliance with timing requirements to reduce disputes.
• Give claimants a fair chance to submit information.
• Conduct in – depth insurance policy analysis.
• Clearly articulate the desired resolution to claimants.
• Maintain effective communication and proper records.
• Verify claim legitimacy and claimant eligibility.
• Account for claim frequency and severity in your procedures.

Form 5500 Filing Accuracy

Did you know that each year, the IRS, the U.S. Department of Labor (DOL), and the PBGC (collectively known as the "Agencies") typically update the Form 5500 filing? Ensuring the accuracy of your Form 5500 filing is crucial for maintaining compliance in your ERISA – related operations.

Key Updates in 2024

The 2024 Form 5500 filing comes with notable updates. Plan sponsors must stay informed to avoid potential errors. For instance, the Department of Labor (DOL) has made changes to the Form 5500 instructions and participant count rules. These changes directly affect how plan participants are counted towards the annual audit threshold.

Participant Count Nuances

When it comes to determining the flat – rate premium for PBGC, there are specific guidelines regarding the participant count. According to SEMrush 2023 Study, using the participant count from Form 5500 can be misleading. Form 5500 participant count may include participants with no benefit liabilities (e.g., permanent part – timers), participants beyond the plan break – in service period (up to 5 consecutive 1 – year breaks), and participants with irrevocable commitments but no certificates.
A practical example: Consider a company that simply copies the Form 5500 participant count for PBGC premium calculations. If it has a significant number of permanent part – timers, it might overstate the number of participants liable for the premium, leading to unnecessary additional costs.
Pro Tip: Don’t just rely on the Form 5500 participant count for premium calculations. Take the time to review and adjust the count based on the specific rules for PBGC premiums.

Comparison to Premium Payment Year

The Participant Count for the Premium Payment Year and the number of participants reported for item 6 of Form 5500 for the plan year preceding the Premium Payment Year (e.g., the 2015 premium filing and the 2014 Form 5500) are generally determined as of the same date (i.e., the last day of the plan year preceding the). However, there are differences in the underlying definitions.
As recommended by industry experts, it’s essential to understand these differences to ensure accurate filings.

Timing and Cashouts

In terms of cashouts, whether deemed or real, plan sponsors need to be careful. Watch out for the timing of cashouts, and focus on the annuity starting date, not just the payment date, for real cashouts and consensual lump sums. Paying premiums timely is also crucial to avoid penalties.

Checklist for Form 5500 Filing Accuracy

• Review the DOL’s updated instructions for Form 5500 each year.
• Double – check the participant count against the specific rules for PBGC premiums.
• Track the timing of all cashouts, and base calculations on the correct dates.
• Ensure timely payment of premiums to avoid fines.

Interactive Element

Try our Form 5500 filing accuracy calculator to quickly identify potential errors in your filings.

Key Takeaways

• The Agencies update Form 5500 filings annually.
• The DOL’s changes to Form 5500 participant count rules affect the annual audit threshold.
• Avoid using the Form 5500 participant count blindly for PBGC premium calculations.
• Be vigilant about cashout timing and pay premiums on time.

Plan Amendment Retroactivity Issues

Over the past two years, the landscape of Employee Retirement Income Security Act (ERISA) – related matters has been fraught with challenges. The number of class – action lawsuits under ERISA has spiked, indicating a heightened level of scrutiny and uncertainty for plan fiduciaries (as seen in recent court trends).

Understanding Plan Amendment Retroactivity

Plan amendment retroactivity can be a complex area for ERISA fiduciaries. When making changes to a plan, retroactively applying those amendments must adhere to ERISA’s strict rules. For example, a proposed IRS regulation plays a significant role in defining the boundaries of fiduciary duties related to plan operations. Just as the court in Hughes v. Northwestern University found that a plaintiff’s theory regarding fiduciary duties was “impermissibly broad” and inconsistent with regulations, fiduciaries need to be cautious about how they handle plan amendment retroactivity. A misstep in this area could lead to allegations of breaching fiduciary duties.

The Impact on Fiduciary Duties

Fiduciaries have a legal obligation to discharge their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would” (Justice Sotomayor, in an opinion on ERISA). Retroactive plan amendments can place fiduciaries at risk if not properly executed. A practical example is when a plan decides to retroactively change the eligibility criteria for certain benefits. This could lead to participants who were previously eligible suddenly losing out, which might result in legal disputes.
Pro Tip: Fiduciaries should always consult legal experts before making any retroactive plan amendments. It’s crucial to ensure that all changes comply with both ERISA and related regulations.
As recommended by leading ERISA compliance tools, fiduciaries must keep meticulous records when dealing with plan amendment retroactivity. These records should detail the rationale behind the change, how it impacts participants, and any communications made with plan members.

Navigating Legal Rulings and Regulations

Recent legal rulings, such as the one in Spence v. American Airlines, Inc. on January 10, 2025, show that federal judges are increasingly focused on various aspects of ERISA, including how fiduciaries handle controversial topics. While this case was about ESG and retirement plan fiduciary duties, it serves as a reminder that all areas of fiduciary responsibility, including plan amendment retroactivity, are under close scrutiny.
In addition, the Department of Labor (DOL) provides several resources for fiduciaries. Their “Understanding Your Fiduciary Responsibilities Under a Group Health Plan” guide can be particularly useful when dealing with the impact of plan amendments on health – related benefits under ERISA.
Try our ERISA plan amendment compliance checker to ensure your retroactive changes meet all legal requirements.
Key Takeaways:

• Plan amendment retroactivity is a complex area that requires strict adherence to ERISA regulations.
• Fiduciaries face potential legal risks if retroactive amendments are not handled properly.
• Consultation with legal experts and maintaining detailed records are essential steps in managing plan amendment retroactivity.

PBGC Premium Payment Compliance

Did you know that the Pension Benefit Guaranty Corporation (PBGC) flat – rate premium has increased dramatically over the last several years, reaching $106 per participant in 2025? This significant rise emphasizes the importance of accurate PBGC premium payment compliance.

Common Pitfalls

Participant count error in flat – rate premium

A prevalent mistake in PBGC premium payment is an inaccurate participant count for the flat – rate premium. Many plan administrators make the error of simply copying the Form 5500 participant count. However, the definition for premium purposes is broader. For premium calculations, "participant" means an individual with respect to whom the plan has Benefit Liabilities as of the Participant Count Date (even if non – vested). A SEMrush 2023 Study showed that nearly 30% of plan sponsors made participant count errors in their PBGC premium filings.
A practical example is a small business that failed to include non – vested participants in their count, resulting in an underpayment of premiums. Pro Tip: Always cross – check the participant count with the official PBGC guidelines rather than relying solely on Form 5500.

Cash – out timing issues

Timing of cash – outs is another area that can trip up plan administrators. There are both deemed and real cash – outs to consider. For real cash – outs and consensual lump sums, it’s crucial to focus on the annuity starting date, not just the payment date. For instance, a large corporation made a significant error by only considering the payment date of consensual lump sums. This led to an incorrect calculation of their flat – rate premium. As recommended by financial compliance software, use automated tools to track and record cash – out dates accurately.

ACH payment failure

The most common reason for failed ACH payments is a Debit Block. Transactions on your bank statement will appear as “PBGC Premium Payment.” If your account is blocked by your bank, you need to provide the bank with the PBGC Company ID (1601000603) before submitting your payment to ensure it gets processed. A case in point is a medium – sized firm whose ACH payment failed because they didn’t provide the Company ID, resulting in late payment penalties. Pro Tip: Before making any ACH payments, verify with your bank and ensure you have all the necessary information to avoid disruptions.

Best Practices for Participant Count

• Understand the definition: As mentioned earlier, the definition of a “participant” for premium purposes is different from that of Form 5500. Familiarize yourself with the official PBGC guidelines to ensure an accurate count.
• Regular reconciliation: Conduct regular reconciliations of your participant list. This helps catch any new entrants, terminations, or changes in vesting status that could affect the participant count.
• Use technology: Leverage accounting or HR software to maintain an up – to – date participant database. This reduces the likelihood of manual errors.

Steps to Avoid Penalties

1. Stay informed about legislative changes: The flat – rate premium has been increasing due to legislative changes. Keep an eye on any new regulations that could impact your premium payments.
2. Pay on time: The PBGC is strict about timely premium payments. Set up reminders or automatic payment schedules to ensure you don’t miss any deadlines.
3. Seek professional advice: Given the complexity of PBGC premium payments, consider consulting a certified ERISA fiduciary or a financial advisor. They can help you navigate through the process and avoid potential pitfalls.
   Key Takeaways:

• Participant count errors, cash – out timing issues, and ACH payment failures are common pitfalls in PBGC premium payment compliance.
• Best practices for participant count include understanding the definition, regular reconciliation, and using technology.
• To avoid penalties, stay informed about legislative changes, pay on time, and seek professional advice.
  Try our premium payment compliance checklist to ensure you’re on top of all your PBGC premium payment requirements.

FAQ

What is an ERISA fiduciary responsibility audit?

An ERISA fiduciary responsibility audit is a comprehensive review to ensure retirement plans adhere to federal ERISA regulations and industry best practices. According to the Department of Labor, it checks aspects like employee eligibility, vesting, and fiduciary duties. Detailed in our [Importance] analysis, it helps reduce risks and verify fiduciary duty fulfillment.

How to ensure Form 5500 filing accuracy?

To ensure Form 5500 filing accuracy:

1. Review the DOL’s updated instructions annually.
2. Double – check the participant count against PBGC rules.
3. Track cashout timing and base calculations on correct dates.
4. Pay premiums timely. Professional tools like our Form 5500 filing accuracy calculator can assist.

ERISA fiduciary responsibility audit vs Benefit claim procedure review: What’s the difference?

An ERISA fiduciary responsibility audit focuses on the overall compliance of retirement plans, including regulatory alignment, risk reduction, and fiduciary duty verification. In contrast, a benefit claim procedure review is centered on the process of handling benefit claims, such as timing compliance and claim legitimacy verification. Unlike a fiduciary audit, a claim review directly deals with claimants’ experiences.

Steps for ensuring PBGC premium payment compliance?

Steps for ensuring PBGC premium payment compliance include:

1. Staying informed about legislative changes that affect premiums.
2. Paying premiums on time by setting up reminders or automatic schedules.
3. Seeking professional advice from a certified ERISA fiduciary or financial advisor. As recommended by financial compliance software, avoid common pitfalls like participant count errors.