What is ERISA?
In 1974, the federal government passed a law called the Employee Retirement Security Act (ERISA) that protects the retirement assets of Americans from misuse by plan fiduciaries. The law established requirements and guidelines for employers, benefit plan managers, trustees, and other service providers. ERISA was enacted to protect the welfare of individuals who are covered under the plans, but it does not require companies to offer them.
Overseen by the Department of Labor, ERISA sets minimum standards for private industry savings plans, pensions, healthcare, and any other items offered as part of employee benefit plans, such as life insurance. This set of laws requires plan managers to keep participants informed of their rights, and gives them the right to sue the fiduciaries for unpaid benefits if the plan is mismanaged.
To protect employees’ retirement contributions in the event of a plan being terminated, ERISA also put in place a federal entity, The Pension Guaranty Corporation, that guarantees payment of specific benefits.
ERISA requirements
ERISA requirements include minimum participation standards. It stipulates how long a person may be required to work before becoming eligible to participate in the plan, accumulate benefits, and become vested. Under this law, employees must be notified of benefit plan terms, including funding, costs, and plan features.
The main goal of the Employee Retirement Security Act was to set standards for both employee benefits and the duties of fiduciaries — anyone who has discretionary authority or control over a plan’s management or assets.
ERISA guidance
To make sure your company’s benefits plan is in compliance, partner with an ERISA qualified public accountant who can help you guarantee the plan you offer your employees meets all of the requirements under the federal law. The California CPA firm of GYL has experts on staff that have a detailed understanding of the ERISA standards as well as the fiduciary responsibility your plan manager must meet.
Our team of CPA’s also has in-depth knowledge of the best business and accounting practices that apply to specific industries. Some of the industries we work with include automotive dealerships, commercial Real Estate firms, construction companies, manufacturing and distribution organizations, and nonprofit entities.
We can help you ensure that your company is in full compliance with all federal financial regulations, including those that pertain to ERISA. Call today for a free consultation.