ERISA Compliance FAQs

What is an ERISA Plan?

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers. ERISA includes requirements for both retirement plans (for example, 401(k) plans) and welfare benefit plans (for example, group health plans). ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

The Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), enforces most of ERISA’s provisions. Violating ERISA can have serious and costly consequences for employers that sponsor welfare benefit plans, either through DOL enforcement actions and penalty assessments or through participant lawsuits.

This Legislative Brief includes a set of frequently asked questions (FAQs) to help employers determine whether their employee benefits plans are subject to ERISA.

Which Employers Are Subject to ERISA?

ERISA applies to virtually all private-sector employers that maintain welfare benefit plans for their employees, regardless of the size of the employer. This includes corporations, partnerships, limited liability companies, sole proprietorships and nonprofit organizations.

ERISA only exempts two types of employers:

• Employee benefit plans maintained by governmental employers are exempt from ERISA’s requirements. This exemption includes plans maintained by the federal, state or local (for example, a city, county or township) governments.
• Church plans are also exempt from ERISA. A church plan is any employee benefit plan established or maintained by a church or by a convention or association of churches that is exempt from tax under Section 501 of the Internal Revenue Code (Code), and has not made an election under Code Section 410(d) to be subject to ERISA.

Small employers are subject to ERISA’s requirements, unless they meet the exemption for governmental employers or churches.

Which Welfare Benefit Plans Are Subject To ERISA?

Many employment plans or programs that provide nonretirement benefits to employees are considered employee welfare benefit plans that are subject to ERISA.

To qualify as an ERISA plan, there must be a plan, fund or program that is established by the employer for the purpose of providing ERISA-covered benefits (through the purchase of insurance or otherwise) to participants and their beneficiaries.

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