What Are Examples of ERISA Plans?

The Employee Retirement Income Security Act (ERISA) came into law in 1974 with the goal of providing legal protection to employees with benefits plans provided by their employers. ERISA plans generally cover two types of benefits plans: welfare disability plans that provide benefits following work-related injuries, and retirement plans that help employees plan for the future.

If you have any type of retirement plan or other benefits program managed by your employer, it is crucial to know your rights and their responsibilities under ERISA. ERISA aims to prevent fiduciaries from misusing employees’ funds, but discrepancies can arise in many ways. If you encounter any such issue with your benefits, an ERISA attorney is the ideal resource to consult.

401(k) Plans

One of the most common ERISA plans in the United States is the 401(k) plan. This retirement plan offers tax benefits while providing a covered employee with an avenue to prepare for their future. A 401(k) is a defined contribution plan, meaning both the employee and the employer agree to their contribution amounts when the plan is created. In most cases, an employee elects to have a portion of their income deposited into their 401(k) each pay period and their employer will match their contribution.

Employee Pension Plans

An employee pension plan is similar to a 401(k) in many respects. Employees contribute to these plans with deductions from each paycheck, and once they retire, their employer will disburse predetermined amounts on a regular basis. Payments made are typically based on the age of the employee when they retire and how many years of service they gave to their employer. Essentially, the longer the employee works for the employer, the more they receive in pension benefits.

Deferred Compensation Plans

A deferred compensation plan functions very similarly to an employee pension plan in that the employee will make regular contributions to the plan with every paycheck. Once they retire, the funds in their deferred compensation plan are disbursed. However, unlike an employee pension plan that disburses funds in payments over time, a deferred compensation plan pays out a single lump sum of all the employee’s accrued deferred compensation and their employer’s contributions.

Profit-Sharing Plans

This type of plan is a way for employers to share the success of their businesses with the employees who made that success possible. This is not a defined contribution plan, so an employer elects how much of the company’s profits to share with employees. The employer has the choice of contributing an amount equal to 25% of all employee payroll through profit-sharing plans. If you have this type of plan through your employer it is important that you fully understand the terms and conditions of the plan.

Ayers, Whitlow & Dressler has a team of attorneys with years of experience representing clients in a wide range of employment cases, including those that pertain to disability claims and breaches of fiduciary duty under ERISA. We know how confusing it can be to translate the terminology used in many employer benefits agreements and the uncertainty that follows any experience of fiduciary malfeasance. Nevertheless, if you believe your employer has failed to uphold their fiduciary duty to you in any way with respect to an ERISA benefits plan, we can help you hold them accountable and recover compensation for any losses you experienced.

FAQs

Q: What Are Considered ERISA Plans?

A: ERISA generally covers most employer-provided retirement plans and welfare disability plans. A few examples of ERISA plans that can give way to legal disputes between employees, their employers, and their insurance companies include employer-sponsored retirement plans like pensions, 401(k) plans, deferred compensation plans, and employer profit-sharing plans. Each of these plans can potentially raise distinct legal issues when fiduciary malfeasance occurs.

Q: Can ERISA Apply to Non-Retirement Accounts?

A: Yes, ERISA may also apply to employer-provided life insurance, employer-provided disability insurance, HMO coverage, and FSA accounts. If you have any type of benefits plan through your employer and the employer is not exempt from ERISA, it is likely that the terms and conditions of ERISA apply to the plan in question. If there is any room for doubt, consult an ERISA attorney.

Q: How Do You Know If a Plan Is ERISA or Non-ERISA?

A: ERISA plans typically involve employer contributions. For example, an employee may elect to contribute funds to a specific benefits plan, and their employer will match their contribution. ERISA requires all employers who provide and manage these plans to provide very clear information and updates to covered employees when any changes are made to their plans. Non-ERISA plans are not subject to ERISA rules and will have separate terms and conditions.

Q: What Are Employee Benefit Plans Under ERISA?

A: Under ERISA, an employee benefits plan is any benefits plan offered by the employer that entails employer contributions. Examples include medical, surgical, and hospital care benefits, work-related injury benefits, sickness and death benefits, prepaid legal services, vacation pay, apprenticeship, higher education and vocational training benefits, retirement plans, severance pay, and more.

Q: What Should I Do If My Employer Violates an ERISA Plan?

A: One of the most important functions of ERISA is providing an avenue of legal recourse to any employee whose ERISA plan has been violated in any way by their employer. The plan in question is likely managed by an insurance company, and while the insurance company is subject to the rules of ERISA as well, you must file an administrative appeal through the insurance company before proceeding with a civil claim.

The attorneys at Ayers, Whitlow & Dressler understand how confusing ERISA plans and associated legal disputes can be for employees. Throughout the years of our firm’s operation, we have helped many past clients overcome these cases and recover the benefits owed to them. Your successful ERISA case may not only yield substantial compensation but also prevent others from facing similar mistreatment in the future. If you believe you have any grounds to file an ERISA claim, contact us today and schedule a consultation with our team to learn how we can assist you.