Raleigh, North Carolina (PressExposure) July 23, 2009 -- FOR IMMEDIATE RELEASE
Media Contact: Brian Van Norman 919.232.5008 firstname.lastname@example.org
ERISA Laws Make Third-Party Administrators a Must Have Raleigh Wealth Strategist Says Large and Small Businesses Are at Risk
Recent legal activity regarding compliance with the Employee Retirement Income Security Act shows that employees are becoming increasingly critical of their employers. Dale Merritt, president of Raleigh-based Merritt Wealth Strategies, believes that employers of large and small businesses need to protect themselves from possible litigation, and advises using a third-party administrator to manage employee investment options and plans.
"Employers have the ultimate responsibility to maintain checks and balances for investment plans they offer employees," says Merritt. "The laws regulating plan management are complex, can over burden a company's accounting resources and open the business to lawsuits citing mismanagement."
In a complaint filed on June 25, 2009, employee David K. Parsons alleges that Anheuser-Busch improperly designated an overly risky investment as the qualified default for a cash-from-stock sale. Parsons believes that according to Employee Retirement Income Security Act, Anheuser-Busch should have offered a lower risk option, provided more information about the investment and allowed more time to choose to transfer the money to an employee designated fund.
In another June lawsuit, Motorola received a favorable summary judgment from liability under ERISA section 404(c). Plaintiffs argued that Motorola and a third-party fiduciary did not properly disclose the risk and return characteristics and objectives of the plan. U.S. District Court Judge, Rebecca R. Pallmeyer found that the pamphlet prepared by the fiduciary and distributed to Motorola employees offers multiple options, adequately described plan objectives and ranked the plans according to risk.
Although the previous examples pertain to large corporations, Merritt believes that small business owners need to be cautious as well. He notes that third-party administration of employee benefits provides support and protection to the employer if an employee becomes dissatisfied with an investment plan.
"With so many investors seeing their investment portfolios decimated in the last year, employees want answers and begin to point the blame finger," adds Merritt. "In these instances, quality third-party administration is crucial in ensuring that the disclosure and reporting are handled properly, ultimately saving the employer from legal ramifications."