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Are small businesses required to have written employee benefit plan documents?
by Tony Novak, CPA, MBA, MT
7/8/2014
The simple answer is “yes”, if a small business chooses to offer employee benefit plans that fall into under the broad definition of “employee welfare plans” then they are required to be presented in writing. This requirement comes from the U.S. Department of Labor and the Internal Revenue Service under a 1974 federal law referred to as the Employee Retirement Income Security Act of 1974 (ERISA). Despite the name, ERISA also applies to employee welfare benefit plans other than retirement plans (like heath plans). ERISA pre-empts state law and is therefore the definitive legal authority on the topic.
ERISA contains little guidance as to what information the documents must contain. The 2010 federal law called the Affordable Care Act does add specific requirements if the benefit plan covers employee health benefits.
There is no exemption for small businesses so even plan that covers one person should be documented in writing. There is no requirement for a small business to offer this type of employee benefit but the rules only apply to those who voluntarily choose to participate in offereing an employee benefit plan.
Other likely questions that are covered in separate articles:
What are the risks if I do not have 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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