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What are the risks if I do not have employee benefit plan documents?

by Tony Novak, CPA, MBA, MT
7/8/2014

The Internal Revenue Service and Department of Labor primarily rely on voluntary compliance for small business employee benefit plans so it is unlikely that an unintentional failure to have proper employee benefit plan documents would trigger a penalty.

The real risk arises when there is a dispute and related litigation. Without the benefit plan documented documents, a legal dispute with a former employee or an insurance company would put the employer at a substantial disadvantage. The employer would not likely survive the legal challenge.

Other likely questions that are covered in separate articles:

Are small businesses required to have written employee benefit plan documents?

How do employee benefit plan documents help me?

Is the insurance policy good enough to serve as an employee benefit plan?

How can I get sample employee benefit plan documents for my small business?

Related topics:

Reporting and Disclosure Guide for Employee Benefit Plans

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Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator" but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.

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