DOL Initiatives: Questions Answered

[Editor's note: Last month, advisory board member Sherwin Kaplan and his colleague at Nixon Peabody, Eric Paley, conducted a webinar titled "Managing and Protecting Your Employee Benefit Plans: New Department of Labor Initiatives."  As part of that webinar, Kaplan and Paley took questions from the audience, but they were unable to get to every question in the time allocated for the program.  Kaplan-a former co-chair of the Bloomberg BNA Pension & Benefits Publications Advisory Board-agreed to answer outstanding questions here on the blog. The following are questions submitted during the webinar, with Kaplan's answers.]

  Q: For Welfare Benefit plans required to file 5500 forms, I understand the requirement is for plans with 100 or more participant employees, correct? (not counting dependents)  Does it apply to all benefits offered as long as one benefit (group medical for example) meets the 100 participants requirement or would other benefits such as voluntary dental, etc. that may have less than 100 participating employees not need to be included in the form?   

A: The counting is done by the number of participants—not by the benefits each participant receives.  If there are enough overall participants in the Plan to trigger the filing requirement, it is irrelevant that some benefits the plan offers are being used by less than 100 eligible participants. 

  Q: Do you think DOL is going to pass regulatory or other commentary on MEP's?   

  A: We are now in election silly season.  Anything significant on the regulatory front that EBSA does or does not do will have to pass through a political prism.  I really have no idea of how this will play out, except that I don’t think DOL will want to antagonize any important interest groups between now and November. 

  Q: Is there a tool for auditing if someone is in compliance with filing their 5500 Form and what the penalty for a company that does not file or file in a timely manner?   

  A: Forms 5500 are public documents and their filing is a matter of public record.  Simply checking the database to see if a 5500 has been filed is the best way to determine compliance, since DOL would reject (i.e. not allow to be filed) a deficient Form 5500.  There are monetary penalties for not filing complete Forms 5500 on time, but there are also programs in place to lessen those penalties for appropriate reasons.  DOL’s goals are (1) to have people take the filing requirements seriously and (2) to obtain accurate and timely Forms 5500.  The monetary penalties, which can be very severe if someone refuses to cooperate, are designed to achieve these goals. 

  Q: Can you provide details of how to access the model disclosure notice for individual directed plans?   

  A: The DOL/EBSA website ( is a good way to start.  Another option is to ask your vendor to provide a sample disclosure notice. 

  Q: Would you say once again what is the definition of a "multiple welfare arrangement"   

  A: I think you mean a “multiple employer welfare arrangement”  The statute (ERISA), 29 U.S.C. section 1002(40) defines it as a welfare plan established or maintained to provide welfare benefits to the employees of two or more employers.  The definition has several exclusions, including licensed insurance companies and plans established through legitimate collective bargaining agreements. 

  Q: Our company sponsors a high-deductible health plan for employees with an HSA component.  We've arranged for a service provider to administer the HSA accounts, but employees are free to select any HSA administrator.  Does my company have any fiduciary duties with regard to these HSA accounts?   

  A: An HSA is rarely subject to ERISA, so the employer shouldn’t have any fiduciary responsibility toward the employee under federal law.  State law may well apply, however. 

  Q: Re: delinquent plan contributions, does this relate solely to retirement plans, or does it include items such as employee HSA contributions, section 125 plan contributions, etc.?   

  A: The ERISA rules shouldn’t apply to a 125 plan because the benefits thereunder largely aren’t subject to ERISA, and for a medical FSA, the entire amount to be contributed to the FSA has to be available to a participant anyhow, regardless of when contributed. Again, an HSA is rarely subject to ERISA, so again, I don’t think the rules would apply in any case. 

  Q: Is a Church plan covered under ERISA if the Church also has a K-12 School under its "umbrella" of benefits.  This includes teachers, principals, classroom helpers, as well as office staff.   

  A: Church plan determinations are subjective in nature.  They largely turn on how much control the church exerts over the organization.  We obviously can’t make that determination here from the facts provided. 

  Q: How can the DOL expect service providers to comply with 408b2 if "final final" regulation is still not published? Do you expect a revised effective date?   

  A: Final regulations have now been published and the effective date has been moved back a few months to allow everyone to comply.  I don’t expect any further extensions of the effective date. 

  Q: Can you please address DOL audits of health and welfare plans?    

  A: DOL audits health and welfare plans as it does all types of plans covered by ERISA.  In fact, one of its targeted programs is to look at Multiple Employer Welfare Arrangements (MEWAs).  What DOL is primarily looking for is to determine that all plan assets are properly accounted for and that the promises the Plan makes to its participants are kept.  

  Q: We knew at one point that the DOL's audit budget quadrupled after ENRON ... but do we know if they are staffing up for audit and REACT?   

  A: So far, DOL’s enforcement programs have escaped any serious funding cutbacks and have, if anything, increased somewhat.  DOL does not assign specific investigators to individual programs such as REACT, but, rather, requires each of its field offices to devote specified amounts of investigative time to selected enforcement priorities.