What is ERISA?

What is ERISA and why should I know about it if I want to set up a 401k plan for my small business?- Anna Kramer, Connecticut

ERISA stands for the Employee Retirement Income Security Act of 1974. This is a federal law that outlines the standards that apply to retirement plans for private businesses like yours. While ERISA does not make it mandatory for you to set up a 401k for your employees, it does require that some minimum standards be met if you do have such a retirement benefit plan for your business.

This Act covers health and other welfare plans in addition to retirement plans like 401k. The responsibilities that you have to meet with regards to your small business 401k are clearly outlined by the ERISA which is why you need to be familiar with this 1974 Act to ensure compliance. The Department of Labor website has detailed information on ERISA that you can use to understand more about this act and how it affects you.

Non compliance with ERISA’s fiduciary responsibilities can make you liable to make good losses sustained from your negligence. But this need not put you off from setting up your own 401k plan for your small business. ERISA requirements are quite straight forward, making it easy to comply with them.

By using a software suite like http://401ksolution.com you can ensure that you are kept updated about any changes to this act. This suite also has in- built record keeping and report generation features that make mandatory government reporting simple.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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