What Is ERISA?

ERISA stands for the Employee Retirement Income Security Act of 1974. It is a federal law in the United States that sets minimum standards for retirement plans, including 401(k) plans, to protect the interests of plan participants and ensure the plans are operated and managed responsibly.

Here are some key points to understand about ERISA in relation to 401(k) plans:

1. Fiduciary Responsibility: ERISA imposes fiduciary duties on those who manage and control the operation of a retirement plan, including 401(k) plans. Fiduciaries have a legal obligation to act solely in the best interests of the plan participants and beneficiaries, prudently manage the plan’s assets, diversify investments, and follow the plan documents.

2. Reporting and Disclosure Requirements: ERISA requires plan administrators to provide certain information to plan participants and beneficiaries, including summary plan descriptions (SPDs), annual reports (Form 5500), investment-related disclosures, fee disclosures, and other pertinent information. This ensures transparency and helps participants make informed decisions about their retirement savings.

3. Vesting and Participation Rules: ERISA sets guidelines for vesting, which determines when employees have ownership rights to their employer-provided contributions. It also establishes eligibility and participation requirements, stating when employees can join the plan and when they become eligible for employer contributions.

4. Non-Discrimination and Contribution Limits: ERISA mandates that retirement plans, including 401(k) plans, do not discriminate in favor of highly compensated employees. It sets limits on the amount of contributions that can be made to a plan, both by employees (pre-tax and Roth contributions) and by employers (matching contributions and profit-sharing contributions).

5. Plan Termination and Portability: ERISA provides guidelines for the termination of retirement plans and the distribution of plan assets in the event of plan termination. It also allows for the portability of retirement benefits when an employee changes jobs, giving them the option to roll over their 401(k) account into an Individual Retirement Account (IRA) or another qualified retirement plan.

6. Enforcement and Legal Remedies: ERISA grants the Department of Labor (DOL) authority to enforce compliance with the law’s provisions. It also allows plan participants and beneficiaries to take legal action to protect their rights and seek remedies if they believe the plan fiduciaries have breached their duties or the plan has violated ERISA provisions.

Compliance with ERISA is crucial for employers offering 401(k) plans, as non-compliance can result in penalties, legal liabilities, and adverse consequences for plan participants. Employers should work closely with legal and financial professionals to ensure their 401(k) plans are designed and administered in accordance with ERISA requirements.

Safe Harbor 401(k) Plans	New Plan Setup	$800
	Transition of Existing Plan	$1,500
	Administration and Annual Compliance Services	$2,000 + $20 Per Participant + 0.05% of plan assets *
	3(38) Investment Fiduciary	0.05% of plan assets

Non-Safe Harbor 401(k) Plans	New Plan Setup	$800
	Transition of Existing Plan	$1,500
	Administration and Annual Compliance Services	$2,500 + $30 Per Participant + 0.05% of plan assets *
	3(38) Investment Fiduciary	0.05% of plan assets

Safe Harbor 401(k) Plans	New Plan Setup	$800
	Transition of Existing Plan	$1,500
	Administration and Annual Compliance Services	$2,000 + $20 Per Participant + 0.05% of plan assets *

Non-Safe Harbor 401(k) Plans	New Plan Setup	$800
	Transition of Existing Plan	$1,500
	Administration and Annual Compliance Services	$2,500 + $30 Per Participant + 0.05% of plan assets *

Safe Harbor 401(k) Plans	New Plan Setup	$800
	Transition of Existing Plan	$1,500
	Administration and Annual Compliance Services	$1,000 + $15 Per Participant + 0.05% of plan assets *