ERISA: plan document, SPD and Form 5500

The moment Northwind's health plan started, it became an ERISABenefitsERISAThe Employee Retirement Income Security Act of 1974 — the federal law that governs private employers' benefit plans, health and retirement alike: a written plan document, disclosure to participants, annual reporting and fiduciary duties plan. ERISA governs a private employer's benefit plans — health and retirement alike — and starts with one rule: every plan is established and maintained under a written instrument that names at least one fiduciary.

The carrier's certificate of coverage describes the insurance; it is often not a plan documentBenefitsPlan documentThe written instrument every ERISA plan must be established and maintained under, naming the fiduciaries and stating how the plan works. An insurance certificate alone often is not one on its own. A summary plan descriptionBenefitsSummary plan descriptionThe plain-language explanation of an ERISA plan a participant is owed within 90 days of becoming covered — and a new plan within 120 days of becoming subject to ERISA is owed to each participant within 90 days of becoming covered, and a new plan has 120 days after becoming subject to ERISA to hand it out.

Whoever exercises discretion over the plan — Northwind, and in practice the founder who runs it — is an ERISA fiduciaryBenefitsERISA fiduciaryAnyone who exercises discretion over a plan or its assets, starting with the named fiduciary the plan document must name. Must act solely in participants' interest, for the exclusive purpose of providing benefits and paying reasonable plan expenses, prudently, diversifying investments, and by the plan's terms. The duties are old trust law: act solely in the interest of participants, for the exclusive purpose of paying benefits and reasonable plan expenses, with a prudent expert's care, diversifying investments, and following the plan's own terms. In a health plan that mostly means picking and monitoring the carrier and the broker carefully, and sending the employees' withheld premiums where they belong on time.

The plan's annual return is Form 5500BenefitsForm 5500The annual return of an ERISA plan, filed electronically through EFAST2 by the last day of the seventh month after the plan year ends (July 31 for a calendar year), extendable by up to 2½ months on Form 5558. An unfunded or fully insured welfare plan under 100 participants at the start of the year is exempt; a 401(k) is not, filed electronically through EFAST2 by the last day of the seventh month after the plan year ends — July 31 for a calendar year — with up to 2½ more months on Form 5558. A welfare plan with fewer than 100 participants at the start of the year is exempt if it is unfunded, fully insured, or both, with employee contributions forwarded within three months. A 401(k) is a pension plan, and files.