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  • Writer's pictureMichelle Marsh

The Ultimate ERISA Overview for Employers

Updated: Jun 18

One of the most important federal laws governing employee benefits is the Employee Retirement Income Security Act (ERISA). This law establishes minimum standards for retirement plans in the private sector and imposes additional requirements on employers and plan fiduciaries. If you're new to the role of a plan fiduciary or need a refresher on ERISA compliance, this guide will provide an overview of the law. We'll explain what ERISA is, what it does, and what your responsibilities are as an employer or plan fiduciary. 

Paper on desk that says "The Employee Retirement Income Security Act of 1974 ERISA" with a fountain pen on top


Introduction to ERISA 

ERISA is a federal law enacted in 1974. Its primary goal is to regulate private sector employee-sponsored retirement plans, including 401(k) plans, 403(b) plans, defined benefit plans, and profit-sharing plans. ERISA establishes minimum standards for these plans and makes sure employees receive the benefits they're entitled to. 

ERISA also provides protections for plan participants and beneficiaries, including the right to sue for benefits and the right to access plan information. Additionally, it imposes certain responsibilities and obligations on employers and plan fiduciaries. 


Importance of ERISA Compliance 

ERISA compliance is critical for employers and plan fiduciaries. Noncompliance can result in fines, penalties, and legal liabilities. As an example, late fees from the Department of Labor (DOL) for missing the Form 5500 deadline can run as high as $1,100 per day. Additionally, the IRS can impose up to $250 per day. Failure to comply with ERISA can even result in plan disqualification.

To avoid these consequences, employers should be mindful of their responsibilities, including: 


Filing Annual Reports with the Government 

As an employer, you are required to file annual reports with the government such as Form 5500. These reports provide important information about the plan, including its financial health, investments, and operations.  


Disclosing Plan Information to Participants and Beneficiaries

ERISA requires employers to provide plan participants and beneficiaries with certain information about the retirement plan. This includes summary plan descriptions (SPDs), which explain the key features of the plan, such as eligibility requirements, vesting schedules, and distribution options. Timely and accurate disclosure of this information is crucial to ensure that participants and beneficiaries are aware of their rights and benefits under the plan. 


Employer following ERISA guidelines by discussing retirement plan with employees at meeting

Communicating retirement plan information to participants is an important duty for employers.

Following Fiduciary Standards of Conduct

As an employer, you have a fiduciary responsibility to act in the best interest of the plan participants and beneficiaries. This means making decisions about the plan solely based on what is most advantageous for them, without any conflicts of interest. You must also act prudently in managing the plan's assets, including making informed investment decisions and monitoring the performance of service providers. 


By fulfilling these responsibilities, you demonstrate your commitment to compliance with ERISA and the protection of your employees' retirement benefits. It is important to maintain accurate records and documentation to support your compliance efforts and be prepared for any audits or inquiries from regulatory agencies. 


Find ERISA Support with RPCSI

ERISA and its regulations can be difficult to navigate, which is why our team of experts at RPCSI is here to assist you in meeting your fiduciary obligations and ensuring that your retirement plans are managed in the best interests of plan participants and beneficiaries. 

Our range of services can help employers streamline their ERISA compliance processes, mitigating risks and protecting both themselves and their employees. We can guide you through filing annual reports, disclosing plan information, following fiduciary standards of conduct, and ensuring proper handling of plan assets. 

Don't leave your compliance to chance. Trust RPCSI to ensure your retirement plan complies with ERISA regulations. Contact us today to discuss your ERISA compliance needs and experience the peace of mind that comes with knowing your retirement plan is in good hands. 

Do you know what employees really want? Download our informative infographic to find out!


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