Who Is Subject to ERISA?
Understanding Your Rights Is the Key to Ensuring Your Employer Pays You All Your Benefits
ERISA, short for the Employee Retirement Income Security Act of 1974, is a federal law that protects employees who participate in their employer’s benefit plans. ERISA rules protect employee access to certain health benefits as well.
Employees like you depend on the protections ERISA provides so that your employer does not squander your retirement plan. However, ERISA is a very complicated law.
Trying to handle an ERISA dispute with your employer or plan administrator could be extremely stressful. Would you know where to turn for help If you suspect your employer who is subject to ERISA violated your rights?
Instead of trying to figure out if your employer is subject to ERISA laws, turn to John Peace and the Peace Law Firm for help. Attorney Peace and his team will do all the heavy lifting for you.
The Peace Law Firm is a full-service ERISA law firm dedicated to recovering your benefits. Therefore, you can trust their experience, dedication, and knowledge to win just compensation for you and your family.
How Do You Know If Your Employer Is Subject to ERISA?
Not every employer must follow ERISA. Only employers who offer their employees retirement, health, or other employer-sponsored benefits must comply with ERISA requirements. Notwithstanding, government employers are not subject to ERISA even though they offer pensions and healthcare benefits as part of their compensation packages.
ERISA does not force an employer to create a retirement plan for their employees. Additionally, ERISA does not indicate how much an employer must give their employees as part of their retirement benefits.
However, if your employer chooses to create a retirement plan as part of your compensation, then your employer must meet the minimum standards established by the ERISA law. Your employer is free to exceed the minimum requirements.
What Does It Mean If My Employer Is Subject to ERISA?
ERISA rules protect employees from benefit fund mismanagement by their employer or plan administrator.
Under ERISA, employers must:
- Give information about retirement and benefit plans. The information must include a notice of how the employer will fund the plan as well as the specifics of the plan. Employers must give their employees information about their benefit plans regularly.
- Set the minimum eligibility requirements for employees to participate in the benefits plan.
- Take on the role as a fiduciary or hire a plan administrator to be a fiduciary of the plan. A fiduciary is a person in a trusted position. A fiduciary may be responsible for any losses if they did not discharge their duties properly.
- Allow their employees to sue for benefits and for compensation for a breach of fiduciary duty.
The plan administrators must identify the fiduciaries responsible for the plan. ERISA law only requires that the plan identify one person by either name or title who acts as a fiduciary.
However, the plan may have a committee or board of directors. Commonly, the plan administrator, plan trustee, and investment managers are fiduciaries for a retirement plan subject to ERISA.
How Do You Know If Your Benefits Plan Is Subject to ERISA?
ERISA law applies to most retirement plans offered by private employers.
Those plans include:
- Detailed benefit plans such as fixed pensions or annuities that promise a certain return upon retirement;
- Defined contribution plans to which both employee and employer can contribute;
- Simplified employee pension plans (SEPs), which are usually individual retirement accounts or IRAs;
- 401(k) plans, which include employer matching 401(k) plans;
- Profit-sharing or stock bonus plans; and
- Employee stock ownership plans.
Each plan mentioned above has specific requirements to qualify for participation. The individual rules of each plan may vary. However, each plan must satisfy the minimum requirements under ERISA law.
Fiduciary Rules Under ERISA
Benefit plan fiduciaries must comply with the standard of conduct imposed by ERISA. Congress passed the law that became ERISA to protect beneficiaries from unscrupulous employers who mismanage or squandered their employees’ retirement benefits.
To prevent that from happening, ERISA rules require fiduciaries to:
- Act for the best interest of the plan participants and their beneficiaries;
- Carry out their jobs skillfully;
- Comply with the requirements of the plan (unless inconsistent with ERISA);
- Diversify the funds they manage;
- Avoid conflicts of interest; and
- Pay reasonable administration fees.
The fiduciary must use care when selecting an investment provider for the retirement plan. Additionally, the fiduciary must monitor the programs the investment providers use.
You should be aware that if your 401(k) provider allows you to choose your investments, then the plan’s fiduciary is not responsible for losses. That rule assumes that the administrator set up the plan appropriately and provided information to employees so they can make an informed decision.
What Happens When a Plan Subject to ERISA Terminates?
Under ERISA, Congress established the Pension Benefit Guaranty Corporation (PBGC). The PBGC acts as an insurer for pension plans if an employer terminates an underfunded pension plan.
ERISA guarantees that the PBGC will pay some employees’ benefits if the employer terminates an underfunded plan. The PBGC will pay all vested benefits according to a table established by the U.S. Department of Labor.
Unfortunately, companies close, file for bankruptcy, merge with other companies, or become part of another company as a result of an asset or stock purchase. Retirement plans can get lost in the shuffle.
Banks often hold money belonging to retirement plans even though they have no authority to distribute it. Only plan administrators and fiduciaries have that authority. However, you have the right to request that the bank release your funds.
Did You Lose Retirement Benefits?
Retirement accounts are great as long as your employer maintains them properly. You worked hard for that money; it’s yours and you deserve it. You need to act fast if you are not receiving the benefits you deserve.
Claiming benefits under ERISA is complicated. You might even have a valid claim that is denied. That is why you need representation from a highly qualified and experienced ERISA lawyer like John Peace. Otherwise, you might not receive all the benefits subject to ERISA that you should receive.