Importance of Wrap Plan Documents
[justify][font=Verdana, Geneva]A "Wrap" plan document is required if you are preparing a health and welfare Form 5500 filing that combines more than one benefit into the same filing. For example, if the Plan Sponsor offers health, life, dental and long-term disability benefits to its employees, then a separate Form 5500 filing is required for each benefit contract, unless a Wrap Plan Document exists. ERISA requires that all welfare benefit plans be established and maintained pursuant to a written document with specific provisions. A Summary Plan Description is not a Wrap Plan Document.[/font][/justify]
[justify][font=Verdana, Geneva] [/font][/justify]
[justify][font=Verdana, Geneva]It is very common for employers to consider the insurance company booklets as their plan documents. This is not in sync with ERISA requirements because carriers write their policies to protect themselves and do not include all ERISA concerns, including legal protection for the Plan Sponsor. If caught in audit, the IRS or DOL can impose missed filing penalties, reject the combined filing and require all prior year filings to be refiled separately. [/font][/justify]
[justify][font=Verdana, Geneva] [/font][/justify]
[justify][font=Verdana, Geneva]To Summarize: A written wrap plan document is needed for health and welfare benefits because:[/font][/justify]
[justify][ol]
[li]It is required by ERISA;[/li]
[li]It maximizes the Sponsor's flexibility and operational discretion;[/li]
[li]It allows combining Form 5500 filings, which improves efficiency, reduces preparation costs and potential late or missed filing penalties.[/li]
[/ol]
[/justify]
[justify][font=Verdana, Geneva] We can assist with preparing a Wrap Plan Document for you or your clients at avery low rate. Send an email to info@form5500prep.com with your questions and needs.[/font][/justify]
