By Catherine Hubbard, CCH Washington Staff Writer, and Paul N. Gada, CCH Business Owner's Toolkit Staff Writer
Saving for retirement is a vital topic to employers and employees alike, and for most people the primary vehicle for doing so is through an employer-sponsored plan. But in order to reap the benefits of such plans, careful management and legal compliance are absolutely necessary by those charged with these responsibilities, primarily the business owner or employer.
To help achieve these ends, Labor Secretary Elaine Chao on May 18, 2004, launched a campaign to educate employers and service providers about their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA).
"Strong fiduciary oversight and protecting workers' benefits is our highest priority," said Chao at a press briefing in Washington, D.C. "We want to make sure they know what the laws are and what the seriousness of being a fiduciary is all about," she said.
Chao said the Labor Department uncovered the need to educate fiduciaries as a result of its enforcement efforts in the health benefits and pension plan areas. In fiscal 2003 alone, she said, its enforcement recovered $1.4 billion for employee pension and health benefit programs.
"This new program is designed to help plan sponsors and fiduciaries avoid many of the common problems we have identified through our investigations," she said, noting that ERISA is one of the most complicated statutes under the department's jurisdiction. "This program offers a helping hand to those who want to do the right thing, so that the pension plans of workers will be better protected," Chao said.
Ann Combs, assistant secretary for the Employee Benefits Security Administration (EBSA), said the program will focus on the legal obligations of plan sponsors and other fiduciaries, including:
- understanding the terms of their plans
- selecting and monitoring service providers
- making timely contributions to funds
- avoiding prohibited transactions
- making timely disclosures to plan participants and the government
Co-sponsoring the Labor Department's campaign are the National Federation of Independent Business, the U. S. Chamber of Commerce, the Society for Human Resource Management and the American Institute of Certified Public Accountants. The Small Business Administration also is participating.
The education campaign is the latest in a series of compliance assistance initiatives by the EBSA. Materials, including information on topics such as understanding fees and selecting an auditor, are available at the Employee Benefits Security Administration's web site or by calling 866-444-EBSA (3272).
IRS Initiatives
Complementing efforts made by the Labor Department, the IRS introduced two new tools to help small businesses with employee retirement plan compliance. The first tool is a series of retirement plan "Check-Ups" or compliance checklists for SIMPLE IRA, SEP or SARSEP retirement plans. The checklists are one of the features offered as part of the "Retirement Plans" page on the irs.gov web site.
"Small business owners have told us they want more information on how to choose, establish and operate their retirement plans," said Carol Gold, director of Employee Plans for the IRS. "The IRS is committed to providing businesses with the information they need and presenting it in a quick and easy format. We want all plans to stay compliant and we will do everything we can to help."
Each checklist is geared to one of the three IRA-based retirement plans commonly operated by small businesses and concerns the areas where IRS examiners traditionally find the most problems. The IRS recommends completing a checklist as part of an annual review of the related retirement plan. However, the checklists only cover basic plan requirements and should not be used as a substitute for a complete plan review.
The IRS also unveiled a new periodic newsletter, Retirement News for Employers, that addresses the special concerns of small businesses in relation to the plans they maintain for their employees. The debut issue is available now free of charge on the IRS web site. While visiting the site, businesses may subscribe to receive email notification of future editions of the newsletter.
"For many business owners, a retirement plan is a big incentive in attracting and retaining employees," said Mark O'Donnell, director Customer Education and Outreach for Employee Plans. "Our goal with this newsletter is to deliver to business owners timely and relevant information about all things retirement-related."
The premiere edition of the newsletter contains a lot of useful information such as an article on retirement plan rights and benefits for re-employed veterans, a summary of retirement plan products offered by the IRS, and contact information for obtaining further retirement plan assistance. The newsletter also contains general tax information such as how to apply for an employer identification number online.
Remember that retirement plans need continuous maintenance in order to stay current. Hopefully, the recent efforts by the Labor Department and the IRS will make this task a bit easier for small business owners.
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Added to the news on May 24, 2004.
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