The Employee Retirement Income Security Procedure ERISA identifies ERISA’s legal administrative standards and reporting requirements so that your company will fall into compliance.
The Employee Retirement Income Security Procedure ERISA applies to all companies/organizations that provide benefit plans and are engaged in interstate commerce. The ERISA reporting and disclosure obligations apply to all pension and welfare plans including summary plan descriptions, annual reports, reportable events, and plan termination, unless the company plan is exempt under ERISA. It applies to all companies/organizations that provide benefit plans and are engaged in interstate commerce. Covered plans include medical, disability benefits, and pension plans. (6 pages, 1685 words)
The Employee Retirement Income Security Act of 1974 (ERISA) establishes provisions and defines administration and reporting requirements for employee benefit plans. This Act was passed to establish accountability of employers who offer employee benefit plans and for the protection of participants and their beneficiaries who belong to employee benefit plans.
ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans meet certain minimum standards.
Employee Retirement Income Security Responsibilities:
The Controller should act as the Plan Fiduciary responsible for overseeing fund selections, transfers, additions and withdrawals from all pension plans and meeting pension requirements for compliance bonds or fiduciary liability insurance, as needed.
The Human Resources Manager should also be the Plan Fiduciary responsible for assisting employees with completing all payroll, pension and benefits forms, answers to questions about their pension records, or interfacing with accounting regarding their payroll files.
The Accounting Manager should be responsible for the calculation and application of pension transactions to an employee’s paycheck.
Employee Retirement Income Security Definitions:
Compliance, ERISA or Fidelity Bond is a bond required to guarantee all assets invested by plan participants. Individuals who administer retirement, group health, savings or other employee benefit plans must maintain a fidelity bond, and may be responsible for losses that arise from any breaches of their fiduciary responsibilities or duties. The amount of the bond should be at least 10% of the total assets in the plan.
Defined Benefit Pension Plan is defined as a plan that provides specific payment of retirement benefits, usually for life, after retirement. These plans pay a fixed monthly benefit based on years of service and use a formula to calculate the level of benefits/payment to be received.
Defined Contribution Pension Plan is defined as a plan that requires an amount of money (or securities) be deposited on a fixed monthly basis into an individuals’ personal account. The plan requires individual accounts for each employee who can participate. This plan is not subject to ERISA funding or plan termination insurance requirements. However, the plan must meet the reporting requirements under ERISA.
401(K) Plans are defined contribution plans that allow employees to make pretax deposits through salary deductions.
“Simple” 401 (K) Plans are defined contribution plans that have minimal reporting and discrimination testing for companies with 100 employees or less and do not offer any other retirement programs.
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