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Employee Benefits ERISA basics
Statutes
77
Law
Graduate
05/20/2013

Additional Law Flashcards

 


 

Cards

Term

DEPARTMENT OF LABOR

 

Definition
Created in 1913, enforcement and administration of Title I
Term
Information Letters
Definition
Call attention to well-esablished principlas, issued in response to a request, not binding on DOL
Term
Technical Releases
Definition
Thirteen issued to welfare plans regarding HIPAA, PPACA
Term
Field Assistance Bulletins (FABs)
Definition
Memos to OE and RDs, issued by National Office (usually ORI), shared with public, to promote consistent enforcement/highlight policy and regs
Term
characteristics of a DB Plan
Definition
ER contirbutions, no individual acct balances, Ps do not choose or manage Plan investments, Insured by PBGC, no portability
Term
Types of Defined Contribution Plans
Definition
Savings and Thrift, Profit Sharing, Money Purchase, ESOPs, combined 401(k) profit sharing, KSOP (401(k) & ESOP combo)
Term
Cash or Deferred Arrangements (CoDAs)
Definition
401(k) Plan, 403(b) Plan
Term
Simplified Employee Pensions (SEPs)
Definition
A plan which allows small ERs to contribute inot IRAs on behalf of EEs reduce admin burdens and liabilities over maintaining a tradition Plan. No new SEPs since 1996
Term

S.I.M.P.L.E. Plans

 

Definition
Sep but with <100 EEs, EE deferrals (90 days outside limit), Less stringent R&D, no 5500 (5305 filed), Mandatory ER Contribs., unclear if FidBond needed
Term
ESOPs
Definition
Individual Acct, must be designed for ER stock/securities, may be leveraged, exempt from 404(c) diversifiation
Term
PPACA
Definition
EBSA/HeathHuman Services/IRS, no preexisting under 19, dependent coveage under 26, no lifetime limit, cannot cancel unless fraud
Term
Employer
Definition
1) Any person 2)acting directly as an EE or 3) indirectly in the interest of an EE in 4) relation to an EE bene plan and 5) includes a group or association of ERs acting for an ER
Term
Employer Association
Definition
Not defined by statute, F/C test: How are members solicited, who can participate, who actually participates, how formed?, who exercises control?, member rights and privleges
Term
Single Employer Plan
Definition

Single employer Sec. 3(41): not a multi-employer Plan

 

Term
Multiemployer Plan
Definition
Multiemployer Plan Sec. 3(37): more than one ER makes cons, between EE org and 2+ ERs, and (vip) maintaied under a collective Bargaining agreement
Term
Multiple Employer Welfare Arrangement (MEWA)
Definition
Section 3(40): EE welfare plan or other arrangement, establihed or maintain, for the purpose of offering ERISA benes, to EEs of 2+ employers
Term
Multiple Employer Pensions
Definition
Not permitted under ERISA, recent rise in these arrangements. Called MEPs or Open MEPs
Term
Employee Organization
Definition
Sec. 3(4): any union, EE rep committee, ass'c, group/plan/org, in which EEs participate and which exist sto deal with ERs regarding EE bene plan, or other matters incidental to employment
Term
Employee
Definition
3(6): any individual employed by an employer
Term
Participant
Definition
Sec. 3(7): an employee, a former employee or member of an employee org who is or may become eligible to receive benes (fireston v. brunch)
Term
Beneficiary
Definition
Sec. 3(8): a person designated by a plan or P who is or may become entitled to recieve a bene
Term
Plan, Fund or Program
Definition
Not defined in Sec. 3. Case law/ F/C test: intended benefits/beneficiaries, source of financing, procedure to apply for and collect benefits
Term
Funded v. Unfunded
Definition

funded: benefits provided from a specific pot of money

unfunded/self-funded: benefits paid directly from the general assets of the ER or EE organization

Term
Defined Contribution/Individual Accoutn Plan
Definition
Sec. 3(34): investment risk/loss on P;  benefits=contributions+income+gains +losses and forfitures of other participant acct balances - expenses
Term
Defined Benefit
Definition
Sec. 3(35): A pension plan other than an individual acct plan; benefits based on a formula, typcially based on years of service and salary; invst. risk of gains or losses is on ER, PBGC insurance
Term
When does an employer contribution become a plan asset?
Definition

 

nEmployer contributions become plan assets after they are put into the plan (not when due). 
nIf owed to plan and delinquent, the plan’s claim for the employer contribution is a plan asset.
Term
When does a participant contribution become a plan asset?
Definition
Plan ssets incl. amts that a P or B apays or has withheld from wages by an employer, for contributions to the plan, as of the earliest date on which such contributions can reasonably be segregated from teh ER's general assets.
Term

29 CFR 2510.3-102

Participant Contribution Regulation

Definition

Pension plans: No later than 15 business days after the end of the month in which the amts were withheld.

Welfare plans: no later than 90 business days after end of month in which amts withheld.

SIMPLE plans: no later than 30 days after end of the month in which amts withheld.

Term
Trust Requirement
Definition
If the assets of an entity in whcih a plan invest include plan assets because of the plan's investment, the trust requirement is satisfied if the indicia of ownership is held in trust on behalf of the plan.
Term
Look Through
Definition

 

nLook-through applies only to “equity” interests.
nPlan investments for which underlying assets are never plan assets
nPlan investments for which underlying assets are always plan assets
nPlan investments where it depends on percentage of participation by “benefit plan investors”
Term
Operating Company
Definition

 No look through.

An entity that is primarily engaged, directly or through majority-owned subsidiaries, in a product or service other than the investment of capital.”  Reg. § 2510.3-101(c)

nDefinition states that it also includes “venture capital operating companies” (VCOCs) and “real estate operating companies” (REOCs)
Term

404(a)(1)(A)

Loyalty

Definition
To beneficiaries and Participants
Term

404(a)(1)(B)

Prudence

Definition
with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity & familiar with such matters would us in the conduct of an enterprise of a like character & with like aims.
Not strict liability
Term

Definition
Diversification
Term

404(a)(1)(D)

Plan Documents

Definition
Plan Documents
Term

402(a)(1)

Named Fiduciary

Definition
Named Fiduciary
Term

3(16)

Plan Administrator

Definition
Plan Administrator is a fiduciary under 3(16). Duties are Record keeping, benefit determination, payment expenses, plan admin must admin the plan for the exclusive benefit of Ps and Bs. Must monitor each service provider and ensure reasonable fees.
Term

Trustee

403(a)

Definition
Trustee
Term

402(c)(3) & 3(38)

Investment Manager

Definition
Investment Manager
Term

P

I

N

T

Definition

Plan Admin 3(16)

Investment Mngr 402(c)(3) & 3(38)

Named Fiduciary 402(a)(1)

Trustee 403(a)

Term
PTE 78-6
Definition
allows leasing of classroom space by multiemployer apprenticeship plans by union
Term
PTE 86-128
Definition
Term
Multiple Employer Welfare Arrangement
Definition
Sec. 3(4): An employee welfare benefit plan, or any other arrangement . . . . Established or maintained for providing health, life, disability, accident, training, day care, etc. benefits to the employees of two or more employers…

Not just health plans but other than pensions on retirement or death, and insurance to provide such pensions
Term
When does DOL have jx over a MEWA?
Definition
1. Determination as to whether the benefit being provided is a benefit described in Section 3(1).

2. Determination as to whether the benefit arrangement is established or maintained by an "employer" or an "employee organization."
Term
Preemption Clause (MEWAs)
Definition
Sec. 514(a) ERISA preempts state laws regarding employee benefit plans, including health plans
Term
Savings Clause (MEWAs)
Definition
514(b)(2)(A)States have the right to regulate the business of insurance and persons engaged in that business
Term
The Deemer Clause (MEWAs)
Definition
Sec. 514(b)(2)(B)State laws cannot deem an employee benefit plan to be an insurance company
Term
State conflict (MEWAs)
Definition
A fully insured MEWA can be regulated by the State to the extent that the State establishes standards for levels of reserves and contributions for the plan or trust to be considered able to pay benefits in full when due.
Any MEWA that is not fully insured may be regulated by the State to the extent it is not inconsistent with ERISA.
Term
502(l)(1) fiduciary breaches (penalties)
Definition
)(1) In the case of—

(A) Any breach of fiduciary responsibility under (or other violation of) part 4 by a fiduciary, or

(B) Any knowing participation in such a breach or violation by any other person,

The Secretary shall assess a civil penalty against such fiduciary or person in an amount equal to 20 percent of the applicable recovery amount
Term
502(l) "applicable recovery amount"
Definition
an amount paid by the fiduciary or other person pursuant to –
A settlement agreement with DOL
A court order based on proceedings instituted by DOL
Term
502(l) Settlement Agreements
Definition
Includes voluntary compliance agreement or settlement after DOL has filed civil action
Term
502(l) pentaly waiver/reduction
Definition
if teh DOL finds the person acted reasonably & in good faith or
unreasonable to expect restoration of all losses w/o severe financial hardship
Term
Settlement agreement requirements
Definition
only if there is clear and unambiguous evidence of a settlement.
At a minimum, this requires each of the following—
A well defined agreement as to the terms of the correction
EBSA’s promise not to sue the breaching party if it corrects the alleged violations
A mutual understanding that the correction is made in exchange for the Department’s agreement not to bring suit.
Term
502(i) penalties
Definition
for certain PII transactions, discretionary. Only for welfare and non-qualified plans.
Term
502(m) Penalties
Definition
mandatory: assess a penalty for distributions in a form other than a life annuity for DB plans with a liquidity shortfall, as provided by Sec. 206(e
Term
Section 2
Definition
Provides that welfare plans are not subject to participation and vesting rules for pension plans.
Term
Section 3
Definition
Section 3 - Provides that welfare plans are not subject to the funding rules for defined benefit plans and money purchase pension plans. Allows for payment from general assets without a trust.
Term
Section 5
Definition
Administration and Enforcement applies to both welfare plans and pension plans.
Term
Section 6
Definition
COBRA applies to health plans only
Term
Section 7
Definition
HIPAA applies only to Health plans
Term
Section 402(a)
Definition
Plans must be established and maintained pursuant to a written instrument with a named fiduciary.
Term
Wrap around document
Definition
Document that contains all required SPD information with certificate of coverage
Term
Participant Disclosure
Reg. 2520.102-3(p) & (q)
Definition
SPD must disclose sources of contributions and identity of the funding medium, including an insurance company, trust fund, organization or other entity.
Term
403(a)
Definition
Requires that all plan assets be held in trust by one or more trustees. Benefits paid from sponsor's general assets are not plan assets.
Term
403(b)(1)&(2)
Definition
The trust requirement for plans does not apply to any asset of the Plan consisting of insurance contracts and any assets of the plan held by an insurance company.
Term
SEction 403(b)(4)
Definition
The trust requirement does not apply to a plan the Secretary exempts form the trust requirement if the plan is not subject to Part 2, Part 3, and Title IV (welfare plans are not subject to these parts)
Term
Technicagl Release 92-01 Non-Enforcement Policy
Definition
DOL has a non-enforcement policy for welfare plans regarding the trust requirement even if there are employee contributions.
Term
Types of Group Health Plans
Definition
Single ER Arrangements (METs)
Pooled Coverage (VEBAs)
MEWAs (Colletive bargaining agreements)
Term
Account Based Health Plans
Definition
FSA
HRA
HSA
Term
Types of Funding
Definition
Self-Insured (partial or fully)
Fully insured
Term
Types of Health Plans
Definition
Individual or group
Term
Fully Insured Plans
Definition
Plan Sponsor purchases a policy from an Insurance Company. The insurance company is responsible for processing and paying all claims under the policy.
EE pays portion of premiums, paid via ER
Insurance company has all the risk.
Term
Self-Insured Plan
Definition
Cheaper than Fully insured and does not need to meet State insurance requirements.
Term
Common Issues with Fully Insured Plans
Definition
ER doesn't forward premiums so coverage is retroactively withdrawn.
Term
Section 408(b)(2) Exemption
Definition
from 406(a) for providing services for a reasonable fee
Term
Section 408(b)(5)
Definition
permits plan sponsored by insurance companies to use sponsor's product and services
Term
PTE 77-9 & 84-24
Definition
Transactions involving insurance agents, brokers and consultants
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