The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for retirement plans in private industry. It requires employers to provide retirement benefits to their employees, and to choose a plan that is right for their business and perform various administrative tasks to comply with laws. Qualified retirement plans are designed to provide retirement income to designated employees and their beneficiaries, and must meet certain requirements of the IRS Code in terms of form and operation. The most common types of plans are 401 (k) plans, pension plans, and profit sharing plans.
Employers must follow procedures to ensure that participants and beneficiaries can receive their benefits, and keep abreast of changes in retirement plan laws and regulations. Qualified retirement plans offer certain tax advantages to employers and tax deferral benefits to contributing employees. Taxes on earnings from contributions are also deferred until the employee removes them from the plan. If employers don't offer another retirement plan, they must enroll their employees in the state-sponsored program.
This requires detailed administrative and reporting work under state law.
