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ERISA Laws Make Third-Party Administrators a Must Have
Raleigh Wealth Strategist Says Large and Small Businesses Are at Risk
RALEIGH, N.C. (July 22, 2009)—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.”
About Merritt Wealth Strategies:
Merritt Wealth Strategies is a father-son collaboration of Les and Dale Merritt formed in 2009 to provide investment, insurance and retirement planning services to residents in the Triangle and eastern Wake County. Merritt Wealth Strategies is located at 3356 Six Forks Road, Raleigh, NC 27609. For more information, call 919.782.0033.
About Dale Merritt:
Dale Merritt is president of Merritt Wealth Strategies. Having grown up in Zebulon, Dale is eager to provide financial opportunities to the community in which he was raised, offering real estate and retirement planning, as well as other financial services to eastern Wake County. Merritt has several securities registrations including Series 6, 7, 63 and 66, as well as a Long-Term Care Insurance license and a Life Insurance license. He is a member of the American Association for Long-Term Care Insurance. Merritt believes in remaining active in the community. In addition to being part of the Zebulon Chamber of Commerce and the Knightdale Chamber of Commerce, he maintains active membership in the North Carolina Cattlemen’s Association, the Appalachian State University Triangle Alumni Chapter and the Little River Chapter of Ducks Unlimited. He and his wife, Katie, also volunteer with the Paw Prints Animal Rescue in Garner. For more information, call 919.782.0033.
“Securities and Investment Advisory Services offered through FSC Securities Corporation. Member FINRA/SIPC and a registered investment adviser. Merritt Wealth Strategies is not affiliated with FSC Securities Corporation or registered as a broker-dealer or investment adviser. The views expressed are not necessarily the opinion of FSC Securities Corporation.”
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