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.

Share on Facebook Share on X Share on LinkedIn

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.

Share on Facebook Share on X Share on LinkedIn

Retirement can be a daunting prospect for many American workers. According to Bankrate, nearly 45% of workers doubt they'll save enough to retire comfortably, and over 65% feel they're behind on their retirement savings. But there's hope! No matter your age or current savings, starting now is better than not starting at all. One effective way to boost your savings is through a Health Savings Account (HSA).

What is an HSA?

The BASE® Health Savings Account (HSA) is designed to help you save and pay for qualified health care expenses on a pre-tax basis. This means you get excellent tax benefits, making every health care dollar stretch further. But that's not all – the HSA also offers long-term benefits that many participants overlook.

Short-Term and Long-Term Benefits

In the short term, an HSA helps you manage health care costs. In the long term, it provides an opportunity to save for the future. You can use it to pay for future health care expenses or invest the funds to build wealth and diversify your retirement portfolio.

Triple Tax Advantage

The HSA offers a triple tax advantage:

1. Contributions are made on a pre-tax basis.
2. Investment growth is tax-free.
3. Withdrawals for qualified health care expenses are tax-free.

An individual can truly maximize the potential of an HSA by tapping into its investment capabilities. The BASE® HSA allows you to invest in an interest-bearing account or a standard mutual fund lineup.

A Versatile Savings Tool

The BASE® HSA is not just for health care costs. With over 5,000 mutual funds and investment options through a self-directed brokerage account, it can also serve as a retirement savings tool. Withdrawals for qualified medical expenses are tax-free at any age. Once you reach 65, you can use your HSA money for any reason, though non-medical withdrawals will be taxed. This flexibility makes an HSA a powerful tool for achieving your retirement goals.

Learn More

Interested in maximizing your savings with an HSA? Contact BASE® at 1-888-386-9680 to learn more or visit BASEonline.com for more information.

Share on Facebook Share on X Share on LinkedIn