Who watches over the 684,000 retirement plans and the 2.4 million health plans in this country? Through its enforcement of the Employee Retirement Income Security Act of 1974 (ERISA), that task falls to the Employee Benefits Security Administration (EBSA). It’s a job that the EBSA takes quite seriously.
How seriously? Try nearly $600 million, which can hardly be called insignificant. That’s the sum the EBSA required plan violators to make in direct payments to plans, participants and beneficiaries in 2014 (the most recent year for which data is available).
Make no mistake, the EBSA actively investigates cases and seeks to recover losses for beneficiaries. In many cases (3,928 civil cases closed in 2014), voluntary compliance is sufficient, but in others (161 in 2014), cases are referred to the Department of Labor for litigation – a costly process for any company or organization.
In 2014, EBSA investigations led to the indictment of 106 people, including plan officials, corporate officers and service providers, for crimes related to employee benefit plans, resulting from 365 criminal investigations closed during the year.
Most likely the 106 people who were indicted were aware they were acting in bad faith, but what about the other cases that were settled voluntarily? It’s fair to say that a good portion of them thought they were acting in good faith, but either didn’t fully understand their fiduciary responsibilities, or didn’t receive the right advice.
Bottom line: Learn your fiduciary responsibilities so you can protect yourself, your company and your employees.
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