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New Plan Audit Standards Shift Burdens to Plan Fiduciaries

In an effort to address shortcomings in auditing procedures and reporting raised by the DOL, in July 2019, the Auditing Standards Board of the American Institute of Certified Public Accountants issued a revised Statement on Auditing Standards No. 136 entitled, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA” (“SAS 136”). SAS 136 applies to plan financial statement periods ending on or after December 15, 2021. The updated audit standards imposed by SAS 136 add new audit procedures and significantly shift the burden for producing many plan-related documents to the plan sponsor. The new requirements will make it essential for plan sponsors to be able to produce quality, error-free records that demonstrate compliance in areas like compensation, deferrals, distributions, and vendors’ fees. Even before these new standards went into effect, it was often difficult for plan sponsors to produce such documentation, particularly when it… Continue Reading

Elective Deferral Election Records – Plan Sponsors Proceed With Caution

In a time when most employees make their 401(k) plan elective deferral elections electronically, plan sponsors often do not think twice about maintaining records of employee deferral elections, since they expect their third party administrators (“TPAs”) will retain such electronic records. However, this confidence in the TPA’s records can be a trap for the unwary, as mistakes in the transmission of elections from the TPA to the employer’s payroll can easily occur, and the elections for long-standing employees may have been entered manually based on paper election forms that could have long since been misplaced (or destroyed in accordance with a TPA’s record retention policies). Further, if the plan sponsor has changed TPAs, the current TPA’s records for participants prior to the conversion are based on the records of the prior TPA and may no longer be accessible following conversion to the new TPA.  A lack of reliable records can… Continue Reading

New Guidance Addresses HIPAA Rules and COVID-19 Vaccination Information in the Workplace

HHS recently issued guidance, in a Q&A format, to clarify when the HIPAA privacy rules apply to disclosures and requests for information about an individual’s COVID-19 vaccination status.  Among other questions, the guidance addresses whether HIPAA prohibits an employer from requiring its employees to disclose to the employer whether they have received a COVID-19 vaccination. In its answer, HHS confirms the important distinction under HIPAA between (i) an individual’s health information an employer receives in its capacity as the plan sponsor of its group health plan (generally, a “covered entity” under HIPAA), and (ii) individualized health information received by the employer in its capacity as an employer (i.e., as related to employment functions referred to by HIPAA as “employment records”). HHS confirmed that HIPAA does not apply to employment records and thus does not regulate the information, such as vaccination status, employers are permitted to request from employees as part of… Continue Reading

Before Cleaning Out Files, Brush Up on Record Retention Requirements

Our world is filled with paper and electronic records, and the HR departments at most companies are no exception. Enrollment forms, notices, plan documents, summary plan descriptions, benefit statements, and service records are just a few of the records that fill the HR department?ÇÖs file cabinets and computer storage. While it might be tempting to clean out files, plan sponsors should exercise care before disposing of any files relating to benefits under a plan. A clean desk today could create headaches tomorrow. Generally, ERISA requires an employer to retain plan records to support plan filings, including the annual Form 5500, for at least six years from the filing date (ERISA ?º107) and to maintain records for each employee sufficient to determine the benefits due or that may become due to such employee (ERISA ?º209), with no time limit on such requirement. In addition, HIPAA requires retention of the policies and… Continue Reading

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