Learning About ERISA Compliance is Not Optional


Federal and state regulations can make doing business exceedingly difficult. That is a fact. But since there is no way around it, it is in the best interests of every company to fully understand and follow all applicable regulations. This leads us to the topic of this post: the Employee Retirement Income Security Act (ERISA).

The ERISA was made law in 1974. Its original intent was to codify minimum standards for pension plans offered by the private sector. In the years since, additional legislation has added to the requirements of the original ERISA to make compliance even more complex.

Needless to say that ERISA compliance is not optional. As such, learning how to maintain compliance is not optional either. Someone in your company must have a thorough understanding of the ERISA if the company meets minimum requirements for compliance. If your company offers any of the following, you must comply with the ERISA:

  • Medical insurance
  • Unemployment benefits
  • Paid time off, including holiday pay
  • Retirement plans
  • Sick pay.

These five benefits only scratch the surface. The ERISA applies to other types of benefits programs as well. If you are not sure where your company stands here, you are advised to contact an attorney or another professional who can advise you.


Administrative Requirements

The administrative requirements of the ERISA are both broad and comprehensive. As just one example, companies are required to designate individuals to ensure that their covered benefits programs are in compliance. If your company contracts with a benefits administration provider, like us for example, we can fill that role.

Regulations put the onus on employers to minimize any administrative burdens that might otherwise fall on employees. Regulators do not want employees to have to look at every medical insurance plan, retirement plan, etc. to verify every minute detail.


Basic Provisions

Enforcement of the ERISA falls on the U.S. Department of Labor, the Employee Benefits Security Administration (EBSA), and the IRS. As such, they are the agencies to contact with questions about the details of the law. For the purposes of providing an overview, here are the ERISA's six basic provisions:

  • Plans must be managed for the exclusive benefit of participants and their beneficiaries
  • Plan managers must avoid conflicts of interest in carrying out their duties
  • Plan managers must comply with any and all limitations on plans as provided by law
  • Fund benefits must be provided in accordance with plan rules and any applicable laws
  • Plan managers must disclose and report certain kinds of information to both participants and the government
  • Plan managers must comply with document requests during the course of compliance investigations.

Companies and their plan managers also have a fiduciary responsibility under Part 4 of Title I of the ERISA. This responsibility extends to any action they might take regarding covered plans. In short, companies and their plan managers must always put participant and beneficiary interests first.


We Can Help

What we have described here is but an introduction to ERISA compliance. If you are concerned your company is not maintaining compliance, we can help. We are a company that specializes in benefits administration along with payroll processing. It is part of our responsibility to clients to fully understand the ERISA and its implications.

The ERISA is just one example of the kinds of regulations that are making it increasingly more difficult for companies to handle their payroll and benefits in-house. While we wish that were not the case, we are here to help companies take care of their employees and maintain ERISA compliance at the same time.