Do ERISA regulations Require All Companies to Offer a Retirement Plan?

Federal law does not require employers to offer retirement plans to their employees. If employers choose to offer retirement plans, they must follow strict guidelines regarding how the plans are managed, operated, and presented to employees. The Employee Retirement Income Security Act (ERISA) is the law that governs all retirement plans in the United States. ERISA laws set the requirements for how a company retirement plan must be run. While ERISA does not apply to all employers, states may also set rules for how company plans must be managed. 

What are the retirement plan rules that companies must abide by under ERISA?

A retirement plan can take the form of a pension program for employees (defined benefits) or it can take the form of accounts such as a 401Ks that allow employees to set aside their own funds for retirement. Many employers who offer a 401K will also offer matching funds, by which they pay some contribution to the account based on the contribution the employee makes. 

Even though employers are not required to offer retirement plans, there are several benefits associated with providing these types of retirement plans to employees.

• Offering a retirement plan attracts and retains top employees, especially in a job sector where there may be a shortage of talented workers. 
• Maintaining a retirement plan that has options such as profit sharing or matching contributions encourages employees to continue working with employer for a long period of time. 
• Tax benefits are also available to employers who offer retirement plans. For example, if employers offer "matched" contributions to a retirement account or create a pension fund for employees, employers can deduct the cost from their business taxes due.

What steps should an employer take in order to offer a retirement plan?

Employers who choose to offer retirement plans must comply with all anti-discrimination legislation in doing so. This means that employees must be given an equal opportunity to take advantage of the retirement plan, regardless of their age. Further, ERISA mandates that the funds set aside for retirement plans must be managed with utmost care in order to protect the interests of employees. Other ERISA mandates stipulate that once a retirement plan vests, the employer must provide the promised vested benefits. 

If you are concerned about the retirement plan offered by your company or you believe you are not being treated fairly, you should consult with a lawyer for advice. It is also a good idea for business owners who are considering establishing a retirement plan would also do well to set a meeting with an employment law attorney to obtain guidance and advice on how to make sure a potential retirement plan is in full compliance with ERISA and other relevant laws and regulations.