Employee Benefits | By Sonus Benefits,

ERISA Compliance Checklist

What is ERISA?

ERISA stands for the Employee Retirement Income Security Act of 1974. The Act requires employers to meet certain standards of conduct when providing retirement, health and other benefits to their employees.

ERISA has government reporting requirements as well as employee disclosure requirements. Employers must have a plan and ensure that the plan’s funds are appropriately protected. Companies must also make sure that every eligible employee receives his or her benefits.

Penalties for noncompliance

The Department of Labor can impose civil or criminal penalties for companies that do not comply with ERISA rules. The most common violations of ERISA are:

  • Improperly denying benefits to employees
  • Breach of fiduciary duty
  • Unequal or biased coverage

Essential elements to include in an SPD to be ERISA compliant

There are three major areas necessary for inclusion in any Summary Plan Description (SPD) that a small or medium-size business must address to be ERISA compliant:

  • Documentary compliance
  • Operational compliance
  • Fiduciary compliance

Documentary compliance

Ensuring your company has appropriate documentation simplifies the audit and compliance process. You need to have several things available and up to date:

  • Summary plan description
  • Proof of IRS tax determination
  • Investment policy statement
  • Copies of materials supplied to employees
  • Complete plan with all amendments
  • Participant records
Contracts with providers

Operational compliance

Compliance auditors look for several things to ensure operational conformity with ERISA:

  • Documentation on the oversight process
  • On-time and accurate filing of Form 5500
  • Proof of oversight regarding employee:
    • Eligibility
    • Contributions
    • Withdrawals
    • Loans


Fiduciary responsibility often rests with the owner in small and medium-sized businesses. Businesses need clear documentation that identifies who has fiduciary responsibility, an outline of the specific functions of the fiduciary manager and how the person goes about performing the functions.

Responsibilities of the fiduciary manager include:

  • Ensuring diversity of investments
  • Fair and unbiased support on behalf of all participants and beneficiaries
  • Ensuring that the company complies with the plan

ERISA and employer-sponsored health plans

There are certain specific requirements under ERISA for employer-sponsored health plans. Companies need:

  • Written plan documentation
Summary plan descriptions
  • Notices posted and published annually according to the Law
  • Summary of material modifications (SMM)
  • Proof of COBRA compliance
  • Proof of HIPAA and HITECH compliance
Copies of Medicare Part D notifications to participants
  • Conclusion

Compliance with ERISA starts with formulating a solid summary plan description. Once that is drafted, the formal appointment of an ERISA compliance manager with specific duties and responsibilities will assist the company in demonstrating to the government its good-faith effort to comply with all ERISA requirements.

Legal Disclaimer: Sonus Benefits is not a law firm and nothing herein should be construed as legal advice. Always consult an attorney on all legal and compliance matters. Sonus Benefits is not responsible for the accuracy of the information contained herein.
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