The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA requirements do not make it mandatory for employers to offer plans, but sets standards for those who do.
An example of ERISA compliance would be if you, as an employer, maintain a retirement plan, ERISA requirements specify when your employees can become a participant, how long they have to work before they have a non-forfeitable interest in their benefit, and how long they can be away from their job before it could affect their benefit. ERISA also stipulates whether your employee’s spouse has a right to part of their benefit in the event of their death. ERISA protects the interests of benefit plan participants (employees) and their beneficiaries by:
Employers must provide reports to the government to prove they maintain ERISA compliance, but many fail to do so because they aren’t aware that the reporting process is their responsibility. Here’s a checklist to make sure your company stays ERISA compliant:
Because the insurance carrier typically provides employers with a master contract and certificate of coverage or summary of benefits, some employers mistakenly assume this meets ERISA requirements. These carrier-provided documents contain some but not all of the content required under ERISA. Therefore, in practice, the combination of the "wrap" documents with the carrier-provided documents support the ERISA requirements.
ERISA compliance applies to many private employers, but not to all. It doesn’t cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers’ compensation, unemployment, or disability laws.
If you’re a FrankCrum client, you don’t have to worry about ERISA compliance reporting. That’s just one of the many things we take care of when you choose to partner with us. Keeping you in compliance with HR regulations is what we do best!