How An ERISA Wrap Plan Can Help Your Business

Pension Retirement Income compensation seen on a tabletOne of the most important laws companies have to adhere to is the Employee Retirement Income Security Act of 1974 (ERISA). While every company knows how important legal compliance is, smaller companies might have trouble keeping up with all the requirements and paperwork.

An expertly-done ERISA wrap plan is a convenient way for small businesses to keep up with the provisions of this law and avoid future legal headaches.


ERISA was passed to protect workers in the private sector who are enrolled in health and pension plans. The law does not require employers to provide welfare benefits to their employees. In case that they do, however, the law requires these benefits to meet certain standards.

It is also important to note that ERISA only covers benefits financed by the employer. As such, plans funded by the employee are not under the jurisdiction of this law.

Reporting requirements

ERISA mandates that every employee welfare benefit plan be implemented according to a written document. This document should clearly identify certain basic information about each benefit program. Each party should also receive a detailed, comprehensive summary of the plans. This allows every employee under this program understand the terms and conditions of their benefit plans.

How the ERISA wrap plan helps

The ERISA wrap plan is a way for the employer to collect all relevant documents into a single, accessible document. This makes it easier for both employer and employee to understand who has liability during medical situations.

A wrap plan also allows the business to avoid penalties. One such penalty is a $110 fine per employee per day to any who fails to hand over a compliance report to an employee 30 days after officially filling for one.

For small businesses, a Department of Labor audit can be a nerve-wracking experience. Make sure you can pass yours by hiring HR specialists to help you meet all those legal standards.