CAPITOLGains
HR COMPLIANCE ISSUES YOU SHOULD KNOW
BY KIM MOORE Guest Writer
When you think of business activities,
you are probably able to sort them into two general categories: the work you do that is related to your product or service and the administrative tasks needed to support your business. Generally, business owners are experts in the first area, which is natu- ral because they started a business doing something they know; however, business owners are likely to have less expertise in the second area, which includes important elements like employee program manage- ment, accounting, IT and so on. Business owners invest in a talented
team to take care of customers, yet the presence of a team of employees results in administrative needs that are critical to the business and becoming more complex each year: payroll, human resources, compensa- tion, benefit and retirement plans, time- keeping and regulatory compliance. Not only are these matters crucial to business success, but they are also very important to handle in alignment with current rules and
38 Issue 3, Fall 2016
regulations because of the high costs asso- ciated with noncompliance. Compliance isn’t always a common
sense issue. In fact, because of the complexity of our regulatory environment, being in compliance usually requires a team of specialists. Depending on your business, you may use dedicated staff, engage with outside experts, or have some combination of the two in order to fulfill these needs. The list below contains some areas to consider regardless of how you handle employee programs and compliance for your business.
1. Retirement Plan Fiduciaries Managing a retirement plan is a complex process requiring knowledge of the law and best practices in order to stay in compliance. In their Meeting Your Fiduciary Responsibilities guidelines1
,
the U.S. Department of Labor (DOL) enumerates the responsibilities of plan fiduciaries and explains the potential liability. Per the guidelines, individuals involved in operating a retirement plan are fiduciaries and thus are “subject to
standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries.”
The guidelines also state, “The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA. It requires expertise in a variety of areas, such as investments. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions …With these fiduciary responsibilities, there is also potential liability. Fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions.”
For this reason, plan sponsors and administrators may want to consider engaging a fiduciary consultant to help with the administration of the retirement plan. A fiduciary consultant will sign on as your co-fiduciary to help you maintain compliance, document your due diligence,
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