BASE^® Blog

Employers often have questions about distributing Summary Plan Descriptions (SPDs) and Plan Documents to employees. Understanding what is considered sufficient to comply with the Employee Retirement Income Security Act (ERISA) and the consequence of non-compliance is crucial.

Common Question:

“As the employer, we distributed the SPDs to the ERISA plan participants. A few weeks later, an employee made a written request for a copy of the SAME SPD. Are we obligated to provide the additional copy? Isn’t distributing the plan booklets or insurance certificates enough? What are the consequences if we don’t adhere to ERISA?”

Short Answer:

• YES, you should provide the additional copy.
• NO, distributing benefit booklets or insurance certificates is not enough.
• Failure to adhere to ERISA can result in substantial penalties.

Detailed Explanation:

ERISA does not specify a timeline for when a participant can request a copy of the SPD after it has been distributed during the normal course of action. While benefit booklets and insurance certificates contain valuable information, they do not include all the provisions and details required to comply with ERISA.

If employers do not comply with ERISA regulations, they risk incurring penalties of up to $110 per day, per employee. Therefore, to avoid potential penalties and ensure compliance, employers should provide the requested SPD and Plan Documents to the participant, even if they were recently distributed to all participants.

Bottom Line:

To comply with ERISA and avoid penalties, employers must furnish the requested SPD and Plan Documents to participants, regardless of recent distributions.

For more information about this federally required mandate, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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Financial creep occurs when employees' standard of living rises with their income, turning luxuries into necessities. Employers can help mitigate this by introducing Lifestyle Spending Accounts (LSAs) to support employees' financial well-being.

What is Financial Creep? Financial creep happens when employees spend more as they earn more, often without realizing it. This can lead to financial instability despite higher incomes.

The Role of Employers While salary increases attract and retain talent, it's up to employees to manage their spending. Employers can assist by offering LSAs, which provide reimbursements for services that promote financial stability.

What are LSAs? LSAs are employer-sponsored accounts that reimburse employees for activities and merchandise that enhance physical, financial, and emotional well-being. Unlike traditional benefits accounts, LSAs are flexible and not tax-advantaged.

Growing Interest in LSAs According to a WTW survey, 7% of employers currently offer LSAs, with 38% planning or considering them by 2025. LSAs can cover financial planning services, seminars, home purchase expenses, and more.

Benefits of LSAs LSAs help employees manage their finances better, reducing financial stress. They also offer physical and emotional benefits, making them a versatile tool for employee well-being.

Implementing LSAs Employers should evaluate their current benefits and consider replacing underutilized ones with LSAs. Questions to ask include:

• Are current benefits providing value?
• Can LSAs replace less effective benefits?

LSAs offer a broad spectrum of benefits, supporting employees' financial, physical, and emotional well-being. For more information, contact BASE at 1-888-386-9680 or visit BASEonline.com.

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