9. Not fixing things that should be fixed.
Employers and administrators consistently fail to take advantage of opportunities to identify and correct things they are doing wrong when they upgrade or convert employee benefits administration systems, human resources information systems, and/or payroll systems, observes Daniel J. Wintz of Fraser Stryker PC LLO, in Omaha, Nebraska. “These are the perfect opportunities to review employee benefit plan provisions and to properly program systems’ rules for eligibility, years of service, compensation, benefit accrual, and other definitions and functions,” he notes. “Failure to have a legal compliance review and integration at the time of an upgrade or conversion is simply ‘paving the cow path,’” Wintz says, explaining that that means that, after the upgrade or conversion, the same mistakes will be made, but faster.
10. Not seeking the help of experts.
ERISA imposes a duty of prudence on plan fiduciaries that often is referred to as one of the highest duties known to law—and for good reason. Those fiduciaries must act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” The “familiar with such matters” is the sticking point for those who might otherwise be inclined simply to adopt a “do unto others as you would have others do unto you” approach. Similarly, those who might be naturally predisposed toward a kind of Hippocratic “first, do no harm” stance are afforded no such discretion under ERISA’s strictures.
Albert Feuer of the Law Offices of Albert Feuer in Forest Hills, New York, cautions not only of the failure to have governing plan documents properly executed, but also the “failure to ask any outside counsel, who need not be a lawyer, to perform regular compliance checks of the plan governing documents and the plan practices.” To state the obvious perhaps, Feuer notes that the failure to follow legal counsel’s advice can be problematic, as well as the failure “to inform legal counsel promptly of such failure.”
Simply stated, if you lack the skill, prudence, and diligence of an expert in such matters, you are expected to get help.
Note Nancy Lapera and George Kasper of the Employee Benefits Practice Group of Pullman & Comley, LLC, in Bridgeport, Connecticut, “The old adage of ‘penny wise and pound foolish’ is often proven true where fiduciaries who are reluctant to seek the advice of experts as to day-to-day administration of their plans are later faced with a significant plan event such as an IRS or DoL audit, a corporate transaction, or a plan termination.”
Nevin E. Adams