What Plans Are Subject to ERISA?
You work hard for job benefits. The Employee Retirement Income Security Act of 1974 (ERISA) helps ensure that your employer and benefit plan administrators work hard to protect your benefits when you need them most. What plans are subject to ERISA? Many retirement, healthcare, and insurance plans for non-church and non-government employees.
At the Peace Law Firm, we understand how vital compliance with ERISA is for both plan sponsors and beneficiaries. Our ERISA claim lawyers have over 20 years of experience in ERISA matters and are here to help ensure your benefit plans meet all legal requirements while protecting your interests.
Overview of What Plans Are Subject to ERISA
ERISA sets federal standards to protect individuals who participate in retirement and health plans in the private sector. However, not every plan must follow ERISA rules.
Understanding which plans are covered by ERISA is important to help ensure that you and your employer comply with federal laws and avoid costly penalties. Let’s look at some of the most common ERISA-covered plans.
Retirement Plans
Typically, ERISA-covered retirement plans include the plans listed below.
Defined benefit plans
These plans promise a specific monthly benefit at retirement. The benefits might be a percentage of an employee’s salary. They may also set a dollar amount that the employer collects on a recurring basis.
Defined contribution plans
These plans involve the plan sponsor investing contributions made by the employee or employer to the plan. When the employee retires, they can collect the contributions and the balance of the investment proceeds. Defined contribution plans might include:
- 401(k) plans,
- Profit-sharing plans,
- 403(b) plans, and
- Employee stock ownership plans (ESOPs).
Depending on your plan type, you might be entitled to more or less reporting or fewer disclosures about your plan. For instance, Simplified Employee Pension (SEP) plans have minimal disclosure and reporting requirements.
Healthcare Plans
ERISA covers almost any employee benefit plan or employee welfare benefit plan. Employee welfare benefit plans include employer-provided or employer-maintained health insurance, such as:
- Major medical coverage,
- Health Maintenance Organization coverage (HMO coverage), and
- Preferred Provider Organization coverage (PPO coverage).
ERISA may also apply to your dental and vision coverage, severance plans, flexible spending accounts (FSAs), and employee benefits through employer organizations such as unions or multi-employer plans.
Many ERISA protections can help ensure that you can continue coverage after separating from your job and that you don’t have to endure discrimination when seeking coverage for treatment.
Plans That Cover Loss During Major Life Events
Retirement and healthcare benefits are not the only types of benefits that an employer might provide. Employers might also offer the following to help employees and their loved ones during hard times:
- Disability insurance plans, and
- Life insurance plans.
Typically, ERISA covers these plans as well. You might also receive other fringe benefits from work that ERISA protects. Attorney Robert Peace can help you identify all employment perks that should be subject to ERISA’s compliance requirements.
General ERISA Compliance Requirements
For many employers and plan sponsors, ERISA compliance involves several key obligations.
Fulfilling Fiduciary Responsibilities
Plan administrators must:
- Act in the interest of participants and beneficiaries,
- Manage plans prudently, and
- Avoid conflicts of interest.
Administrators should not self-deal or take risky actions with plan money.
Reporting and Disclosure
Plan administrators must give beneficiaries and participants summary plan descriptions and periodic benefit statements, which should cover the plan's financial status.
Administrators may also need to give participants notice before making certain financial transfers between plans. Sponsors must also submit annual returns to the Internal Revenue Service (IRS).
Providing Participant Rights
Employees are entitled to:
- Access and receive plan information,
- Receive timely processing of their benefit claims,
- Appeal denied claims, and
- Take legal action for fiduciary breaches.
If an administrator violates their ERISA obligations, they may be subject to civil penalties and enforcement actions by the Department of Labor (DOL).
Navigating and monitoring compliance with these requirements can be challenging. This is particularly true when the DOL or IRS initiates an audit or enforcement action.
Proactive compliance strategies, such as regular plan reviews and fiduciary training, are essential for minimizing risks and ensuring you receive all the benefits you deserve.
Plans Excluded from ERISA
While ERISA has a broad reach, certain plans are generally exempt from ERISA’s regulations, such as:
- Government plans—these include benefit plans established or maintained by federal, state, or local governments;
- Church plans—plans from church employers;
- Plans maintained to comply with state laws—plans such as workers’ compensation and unemployment plans; and
- Plans covering sole proprietors—these plans do not fall under ERISA’s governance.
We can help you determine if an exclusion applies in your case and ensure your rights are protected and respected in any ERISA matter.
Partner with Our Trusted ERISA Advocate
Whether you are an employer seeking to ensure compliance or an individual navigating a benefits dispute, the Peace Law Firm is your trusted partner in ERISA matters.
Robert Peace’s extensive experience and commitment to safeguarding your rights and minimizing risks make our firm the go-to resource for navigating this complex area of law.
Contact us today to learn how we can help you achieve compliance and protect your benefit plans. With the Peace Law Firm by your side, you can focus on what matters most—your future, your business, and your employees.
Resource List
- ERISA, U.S. Department of Labor, link.
- 29 U.S.C., §1104, link.
- 29 U.S.C., §§1121, 1124, and 1125 link.
- Participant Rights, U.S. Department of Labor, link.
- Civil Penalties, U.S. Department of Labor, link.
- Form 5500 corner, IRS, link.
- 26 U.S.C. §414, link.
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