September was a big month for everyone, we had back-to-school, Labor Day, and drum roll, please… ERISA’s 45th anniversary!

Last month, the 45th anniversary of the legislation of the Employee Retirement Income Security Act (ERISA) was recognized. Back on September 2, 1974, President Gerald R. Ford signed ERISA into law to protect workers’ rights in retirement and health plans.

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ERISA: A history.

ERISA’s enactment was initiated in part by the Studebaker incident that left thousands of employees without pensions in which they had been promised.

The Studebaker Brothers Manufacturing Company manufactured automobiles starting in the 1920s until the incident occurred which ultimately led to the halt of the corporation. Studebakers cessation on December 20, 1963, left workers as little as 15% of the pension they had been promised.

Prior to ERISA’s enactment, when a company like Studebaker failed, pensions of thousands of workers were lost. Therefore, ERISA matters because having a federal pension insurance program protects hard-earned benefits.

What ERISA means to your business.

It is certainly fitting that this law was signed on Labor Day since this Act provides solid protection in pension plans allowing for a brighter future for all the men and women of our labor force.

Under this law, ERISA requires plans to:

  • Provide participants with plan information including plan features and funding.
  • Designate fiduciaries who are responsible for plan management and plan assets.
  • Requires plans to establish an appeals process for participants to get benefits from their plans.
  • Gives participants the right to sue for benefits and breaches of fiduciary duty.

Making sure you are compliant with ERISA.

Avoid common mistakes employers make about ERISA by doing the following:

1. Maintain a written Plan Document and distribute Summary Plan Descriptions (SPD) to participants.

The SPD must be distributed within 90 days after the participant becomes covered under the plan or within 30 days of a participant’s request.

2. Have a Cafeteria Plan or Premium Only Plan (POP) document in place.

Have a written Section 125 Plan document for any pre-tax benefits in order to avoid penalties.

3. List health FSA and HRA eligibility and funding methods.

Include formal documentation (along with a written plan document and summary plan description) and conduct annual nondiscrimination testing.

4. Eliminate any segregated and/or funded account.

Make sure to fund all benefits out of the general assets of the employer. Pay/reimburse premiums and expenses out of the employer’s general checking or operations account.

5. Ask for amended or updated certificates if any eligibility or funding information changed since those certificates were adopted.

Many employers that change their eligibility provisions fail to update their certificates of coverage and end up administering their plan with different waiting periods and hours of eligibility than are reflected in their plan documentation. This could lead to employment litigation in the event of a dispute.

6. File Forms 5500 for your benefit plan.

Ensure that you have consolidated any and all ERISA qualified plans into one wrap document in order to avoid having to file a Form 5500 for each individual contract.

7. File Forms 5500 on time.

Form 5500 filing is due the last day of the 7th month after the end of the plan year. For example, calendar year plans (ending on December 31) must file Form 5500 by July 31 of the following year. A 2 ½ month extension can be granted by filing Form 5558 by the original Form 5500 filing deadline.

How can PrimePay help?

Cost-effective, legal quality documents and filings.

With our Premier ERISA Wrap Solution, you'll benefit from our industry-leading guarantee and legal compliance review of plan documents and Form 5500 filing.

Together, we can work toward:

  • Satisfying ERISA requirements.
  • Simplifying the amendment process and reducing filing risks.
  • Removing unnecessary filing fees and streamlining documentation (based on your needs).
  • Form 5500 filing.
  • Form 5500 remediation.

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Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.