ERISA
What Does ERISA Require of Employer-Sponsored Retirement Plans?
ERISA (Employee Retirement Income Security Act) is a federal law setting minimum standards for most employer-sponsored retirement and health benefit plans, governing how plans must be managed and what disclosures must be made to participants.
ERISA doesn’t require employers to offer benefits, but once a plan is offered, it imposes fiduciary responsibilities requiring that plan decisions be made in the sole interest of participants, and that specific disclosures (like a Summary Plan Description) be provided.
Plan sponsors can face personal liability for breaches like excessive fees or poor investment oversight. Government and church plans are generally exempt from ERISA.
ERISA Key Facts on Fiduciary Duties and Disclosures:
- Applies to most private-sector employer-sponsored retirement and health plans.
- Imposes fiduciary duties on those managing the plan, including potential personal liability.
- Requires specific participant disclosures, like a Summary Plan Description.
- Government and church plans are generally exempt from ERISA.
Frequently Asked Questions
Does ERISA require an employer to offer a retirement plan?
No—but once offered, ERISA governs how it must be managed.
Can a business owner be personally liable under ERISA?
Yes—plan fiduciaries can face personal liability for breaches.
Are all employer benefit plans subject to ERISA?
Most private-sector plans are; government and church plans are generally exempt.
Does ERISA cover state and local government retirement plans?
No—ERISA specifically exempts governmental plans, along with church plans, though many public employers voluntarily follow similar fiduciary practices.
What happens if a plan sponsor fails to provide required disclosures?
The Department of Labor can impose penalties, and participants may also be able to sue for breach of fiduciary duty or plan document violations.