The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets standards for the majority of health and pension plans of private companies. In doing so, it preserves the assets of millions of people so that the funds deposited into retirement plans during their working careers are available when they retire. Below, the insurance professionals at Unity Insurance discuss what your small business needs to know about ERISA and how it may affect your employee benefits.
Does Your Small Business Fall Under ERISA?
Chances are if you are a private employer in the United States, ERISA applies to your business. However, there are some exceptions. The law does not cover plans maintained or established by churches with employees, governmental entities, or plans that are maintained only to comply with applicable unemployment, disability laws, or workers’ compensation. It also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.
What Does ERISA Impact?
The majority of ERISA’s provisions apply to plans beginning on or after January 1, 1975. According to the U.S. Department of Labor, the law requires plans to:
- Provide participants with plan information, including important information about plan features and funding
- Sets minimum standards for participation, vesting, benefit accrual, and funding
- Provides fiduciary responsibilities for those who manage and control plan assets
- Requires plans to establish a grievance and appeals process for participants to get benefits from their plans
- Gives participants the right to sue for benefits and breaches of fiduciary duty; and,
- Guarantees payment of certain benefits through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation (PBGC), if a defined benefit plan is terminated
Importance of Choosing ERISA Compliant Plans
As a business owner, it is important to ensure that your company is ERISA compliant and understands the steps that need to be taken to maintain this compliance. Common violations of ERISA include failing to operate the designated employee benefit plan, using plan assets to benefit only certain individuals in the company, or taking action against employees such as being fired, fined, or discriminated against when trying to enact these plans. Furthermore, falsifying records or backdating information regarding an employee’s plan can cost an exorbitant amount of money and time, and possibly result in criminal charges. Failing to comply can lead to hefty fines.
Speak With An Agent At Unity Insurance About Employee Benefits
Insurance and benefits can be complex, and as a business owner, it is easy to overlook items that may cause serious consequences. That is why the qualified employee benefits insurance agents at Unity Insurance work diligently to ensure that your business is properly taken care of and that your employees are given adequate benefits on the job. To learn more about how the qualified insurance professionals at Unity Insurance can help you navigate these complex regulations, contact our office at 410-539-6642.