Understanding the laws and requirements for retirement plans and welfare plans can seem overwhelming. You must maintain compliance with the ERISA law and understand the various needs and standards it sets. Keep reading to learn more about ERISA and how you can find a partner to help manage your ERISA plan administration.

What is ERISA?

ERISA stands for the Employee Retirement Income Security Act. It is a federal law designed to protect employee benefit plan participants and their beneficiaries. This law protects both retirement plans and welfare plans that cover more than 141 million workers in America. It was passed on September 2, 1974, and has been amended over the years to reflect the needs of workers in America.

ERISA Requirements for Employee Benefit Plan Administration

The main goal of ERISA is to stop mismanagement and abuse of retirement savings plans and protect employee’s right to benefits. It ensures that individuals in charge of managing saving plans must be held to a high standard and act in the best interest of plan participants. Transparency and accountability are two major tenants of ERISA so that participants can be appropriately informed about their plans.

Three different bodies administer and enforce ERISA.

  • The Labor Department’s Employee Benefits Security Administration
  • The Treasury Department’s Internal Revenue Service (the IRS)
  • The Pension Benefit Guaranty Corporation

ERISA provides the minimum standards required for participation in retirement savings plans or welfare plans as well as the requirements for vesting, benefit accrual, and funding. Plan information must be provided to employees at no cost, and Plan managers are subject to fiduciary responsibilities when they control plan assets. The law also requires that a grievance and appeals process be established for participants.

Which benefits are subject to ERISA?

There are many claims that ERISA applies to and a wide variety of retirement savings plans fall under its administration.

  • Pension plans
  • Retirement plans
  • Health insurance
  • Disability insurance
  • Life insurance
  • Accidental death and dismemberment insurance
  • Employer-sponsored benefits

Under ERISA, employees can sue for benefits and damages if the benefits of their policy are not provided, or there is a lack of fiduciary duty.

ERISA covers almost all employer-sponsored benefits and insurance plans. However, there are certain types of the policy excluded from ERISA. The following are not provided for or regulated by ERISA.

  • Voluntary insurance where the employer does not endorse participation: Policyholders pay their premiums.
  • Individual insurance policies that are not within the plans offered by an individual’s employer
  • Business owner insurance purchased for business owners only and not their employees
  • Government sector insurance that covers public sector employees: The government typically issues this type of insurance policy at a municipal, state, or federal level.
  • Religious organization insurance that covers nonprofits, schools, and other organizations that have recognized religious affiliations
  • Plans maintained outside of the US are not covered under ERISA if they primarily benefit nonresidents.

What are the administrative requirements under ERISA?

The focus of ERISA is on plan administrators and ensuring they uphold their fiduciary duty. Administrators are responsible for maintaining compliance for ERISA, so the responsibility for plan management does not fall on individual policy participants or business owners. Often, a company’s insurance provider will provide plan administrator services and shoulder the responsibilities mandated by ERISA.

Compliance for ERISA falls into three main categories. These responsibilities rest with the plan administrator.

  • Reporting duties require administrators to file information returns with the DOL and IRS. They must provide a summary of the Plan, which includes the coverage levels and claims procedures. If modifications are made to the Plan, Plan administrators are also responsible for reporting these updates.
  • Plan administrators are responsible for the proper disclosure of plan information to plan participants. They are also required to disclose plan information if the DOL requests it.
  • Paying claims falls under the plan administrator’s duties as well. ERISA requires that a claims procedure be established to process benefit claims. If a participant’s claim is denied, information must be provided to the participant.

What are forms required by ERISA?

Typically, plan administrators also handle all paperwork associated with ERISA compliance. It is essential that all forms required are filled out correctly and turned in within the required timeframe. Businesses cannot assume that their insurance provider will handle these tasks, and it is crucial to determine which agency is responsible for all ERISA-related paperwork.

Paperwork and forms for ERISA are required by the IRS and the Department of Labor. The IRS requires an annual report be filed for welfare plans. The DOL requires a significant amount of forms, but small welfare plans are often exempt from a wide range of these forms.

Find a Partner for ERISA Plan Administration

The Ryding Company is a trusted and highly respected retirement plan company in Calabasas. We can handle all aspects of ERISA plan administration, so you do not have to worry about compliance issues or legal problems related to violating the law. Their expert services include plan design, correctional programs, and additional workplace retirement plan services to set your business up for success. They can advise on ERISA 401(k) plans, cash balance pension plans, defined benefit pension plans, and more.

The Ryding Company can work with any sized plan sponsor and advisors with any experience level. They are well-versed in ERISA plans and plan administration. If you need a partner for ERISA plan administration, contact The Ryding Company today.