The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for retirement and health benefit plans in private industry. ERISA does not require any employer to establish a plan; it only requires that those who establish plans must meet certain minimum standards.
ERISA confers substantial law enforcement responsibilities on the Department of Labor, gives the Department of Labor authority to bring a civil action to correct violations of the law, provides investigative authority, and imposes criminal penalties on any person who willfully violates any provisions.
A penalty of up to $1,000 per day may be assessed against plan administrators who fail or refuse to comply with annual reporting requirements. A civil penalty against parties in interest who engage in prohibited transactions with welfare and qualified retirement plans may also be assessed. The penalty can range from five percent to 100 percent of the amount involved in a transaction.
An audit of a retirement plan is generally required if a plan is covered under ERISA and the plan has in excess of 100 participants. A plan audit can be stressful and often reveals some very common errors.
Here are some of the most common errors found during plan audits:
For further information on retirement plan compliance requirements and best practices, please contact Aronson LLC’s Mark Flanagan at 301.231.6257.