ERISA Wrap Document, What is it and Why is it Important
An ERISA wrap document is a written document that helps employers comply with the Employee Retirement Income Security Act (ERISA) for their benefit plans:
Purpose
A wrap document supplements existing plan documents, like insurance policies or benefit booklets, with the information required by ERISA.
Benefits
Wrap documents help employers:
- Meet ERISA requirements
- Create a single plan document for multiple employee benefits
- File only one summary plan description and one Form 5500
How it works
A wrap document "wraps around" existing documents to fill in the gaps left by insurance carriers and third-party administrators. The insurance policy or contract remains part of the plan document, and the plan's benefit provisions are governed by the terms of those documents.
Who needs one
All employers who offer health and welfare benefits, except for government and church plans, are required to have a wrap document. Even a one-person group plan must comply to avoid IRS penalties.
Penalties for non-compliance
The DOL can impose significant penalties for failure to meet ERISA's requirements, including:
- Up to $110 per day per plan
- Up to $1,000 per day per plan for failure to file
- $25 per day up to $15,000 per year per plan from the IRS