ERISA is an acronym frequently thrown around in the world of HR, but what does it mean? ERISA¬†stands for the Employee Retirement Income Security Act. The law sets the standards for pension and Welfare plans to protect employees and their beneficiaries. Many employees are unsure how an ERISA ¬†applies to them, as there are many complex rules associated with the Act, which make it hard to fully understand. Some pension and Welfare plans are ERISA qualified and some are not. Read on to find out if your program is an ERISA qualified plan.
What plans are subject to ERISA?
Employers who contribute to a health or retirement plan are subject to the rules of ERISA. Employer-sponsored plans that take salary deductions from the worker or contributions by the employer is an ERISA qualified plan.
One caveat, however, is that the ERISA doesn’t usually cover group health plans established or maintained by government organizations or religious institutions. ERISA also only applies to plans maintained inside the United States.
Individual retirement plans aren’t usually covered by ERISA, but there are a couple of exceptions if they are employer-sponsored.
What is considered a qualified plan?
An ERISA qualified plan must meet the criteria above. To qualify, a plan must