IRAs are generally not subject to ERISA when you open and fund them yourself, but IRAs your employer establishes or maintains — SEP IRAs, SIMPLE IRAs, and deemed IRAs inside a 401(k) — do fall under ERISA, though usually with lighter obligations than a full pension plan. The answer turns on one question: did an employer establish or maintain the account? That single fact drives your creditor protection, how the account is divided in divorce, and what duties (if any) your employer owes you.
The Rule That Decides Coverage
ERISA reaches any “employee benefit plan,” which federal law defines as a program set up by an employer or employee organization to provide retirement income or defer compensation.1Office of the Law Revision Counsel. 29 USC 1002 – Definitions If no employer establishes, funds, or runs the account, ERISA does not apply.
Maintaining a plan means more than knowing it exists. An employer maintains a plan when it picks investment options, manages distributions, decides who participates, or exercises discretion over how the plan operates. Cross that line and the employer takes on fiduciary duties enforceable in federal court.
One narrow exception cuts the other way: a plan covering only a business owner (or partners) and their spouses is not an ERISA plan, because no common-law employees participate. Solo 401(k)s and owner-only SEP IRAs follow Internal Revenue Code rules but sit outside ERISA’s Title I.
Traditional and Roth IRAs
A traditional IRA under 26 U.S.C. § 408(a) and a Roth IRA under 26 U.S.C. § 408A are accounts you open at a financial institution of your choice and fund with your own money.2Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts No employer establishes or maintains them, so ERISA does not cover them. You choose the investments, control contributions, and handle withdrawals.
Because these accounts sit outside ERISA, they do not benefit from the federal anti-alienation rule that shields ERISA plans from creditors.3Office of the Law Revision Counsel. 29 USC 1056 – Form and Payment of Benefits Protection instead comes from federal bankruptcy law and state exemption statutes. The autonomy has a cost: no employer-fiduciary is watching your fees, performance, or investment quality. That is your job.
SEP and SIMPLE IRAs
Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs are employer-established retirement vehicles.4Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts Because the employer sets them up and puts money in, they technically qualify as ERISA pension plans. In practice, though, their obligations are much lighter than a 401(k)’s.
SEP and SIMPLE IRAs are exempt from ERISA’s participation, vesting, and fiduciary responsibility rules. They are also exempt from most reporting and disclosure requirements when the employer follows an alternative compliance path. For a SEP using the IRS model form (Form 5305-SEP), the employer meets its disclosure obligations by giving each newly eligible employee a copy of the completed form and notifying participants in writing each year of contributions made to their accounts.5eCFR. 29 CFR 2520.104-48 – Alternative Method of Compliance for Model Simplified Employee Pensions SIMPLE IRAs have a similar alternative compliance path. Under either, the employer does not file Form 5500 or produce a full summary plan description.
Skip the alternative compliance rules or use a non-model SEP document, and full Title I reporting kicks in, including the Form 5500 filing and formal participant disclosures.
Payroll Deduction IRAs
Some employers deduct IRA contributions from paychecks and forward the money to an IRA provider without sponsoring a retirement plan. These arrangements stay outside ERISA only if the employer meets all four conditions of the Department of Labor’s safe harbor at 29 C.F.R. § 2510.3-2(d):6eCFR. 29 CFR 2510.3-2 – Employee Pension Benefit Plan
- The employer contributes none of its own money.
- Employees participate voluntarily.
- The employer’s role is limited to letting the IRA provider publicize the program, collecting deductions, and forwarding them.
- The employer receives nothing beyond reasonable payment for the administrative work.
The DOL has flagged specific acts that cross from facilitation into endorsement and drag the program into ERISA: negotiating special account terms unavailable to the public, influencing which investments the provider offers, or paying administrative fees that employees would normally owe.7eCFR. Interpretive Bulletin Relating to Payroll Deduction IRAs If the employer is also the IRA provider, waiving fees the public normally pays counts too. Cross any of these lines and the program becomes an employer-maintained plan subject to full ERISA obligations.
Deemed IRAs Inside Employer Plans
A deemed IRA is a separate account or annuity that sits inside a qualified employer plan such as a 401(k) or 403(b) and accepts voluntary employee contributions treated as traditional or Roth IRA contributions for tax purposes.8Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts Despite the “IRA” label, a deemed IRA is tied to the employer plan and carries ERISA coverage.
For tax purposes, the deemed IRA and the employer plan are treated separately, so the IRA follows standard IRA contribution and distribution rules.9eCFR. 26 CFR 1.408(q)-1 – Deemed IRAs in Qualified Employer Plans For ERISA purposes, it is part of the broader plan, so participants get the plan’s fiduciary oversight and disclosure protections.
State Auto-IRA Programs
A growing number of states — including California, Oregon, and Illinois — require employers without their own retirement plan to enroll workers in a state-run IRA with automatic payroll deductions. Federal courts have held these programs are not ERISA plans because the state, not the employer, establishes and maintains the program. As long as the employer’s role stays limited to forwarding payroll deductions, participating employers do not take on ERISA fiduciary duties.
Why It Matters: Creditor Protection
The ERISA-or-not question has real consequences the moment a creditor, a bankruptcy trustee, or a divorce court appears.
ERISA Plans
Every ERISA-covered pension plan must include a provision preventing benefits from being assigned or seized by creditors.3Office of the Law Revision Counsel. 29 USC 1056 – Form and Payment of Benefits The anti-alienation rule is broad and federally mandated. Only narrow exceptions apply: a qualified domestic relations order in divorce, IRS collection for federal tax debts, and certain federal criminal penalties. Ordinary civil judgment creditors generally cannot reach money in a 401(k) or defined benefit pension.
Traditional and Roth IRAs
IRAs get no anti-alienation shield. In bankruptcy, federal law protects IRA assets up to an aggregate cap of $1,711,975 for the period April 2025 through March 2028.10Office of the Law Revision Counsel. 11 USC 522 – Exemptions Amounts rolled over from an ERISA plan do not count toward the cap and are protected in full. A bankruptcy court can also raise the cap if the interests of justice require it.
Outside bankruptcy, IRA protection depends on state exemption law. Some states protect IRAs in full from civil judgment creditors; others protect only what is reasonably necessary for the account holder’s support. Most states do not extend the exemption to child support or alimony claims.
Rollover IRAs
Rolling a 401(k) balance into a traditional IRA when you change jobs strips away the ERISA anti-alienation protection. The money becomes subject to IRA creditor rules instead. If creditor exposure is a real concern, rolling into a new employer’s 401(k) preserves the stronger federal shield.
Inherited IRAs
If you inherit an IRA from someone other than your spouse, the account receives no protection in federal bankruptcy. The Supreme Court held in Clark v. Rameker that inherited IRAs are not “retirement funds” for purposes of the bankruptcy exemption, because the beneficiary cannot contribute and must take distributions regardless of age.11Justia Supreme Court Center. Clark v. Rameker, 573 U.S. 122 (2014) Some states protect inherited IRAs under their own exemption statutes; federal bankruptcy law does not.
Why It Matters: Divorce
ERISA’s anti-alienation rule creates a specific process for splitting retirement assets. An ERISA-covered plan can be divided only through a qualified domestic relations order — a court order meeting detailed federal requirements, including naming the participant and alternate payee, specifying the amount or percentage, and identifying the plan. Without a valid QDRO, the plan administrator cannot pay a former spouse.
IRAs do not use QDROs. A divorce court can order a direct transfer between spouses’ IRAs, and under tax law that transfer under a divorce decree is not a taxable event. The process is simpler, but the account holder should confirm the transfer is properly documented to avoid unintended tax consequences.
Quick Reference by Account Type
- Traditional IRA: Not ERISA. Bankruptcy protection up to $1,711,975 (2025–2028); state law governs other creditor claims.
- Roth IRA: Not ERISA. Same bankruptcy cap and state-law protections as a traditional IRA.
- SEP IRA: Technically ERISA, but exempt from most Title I requirements under the alternative compliance method.
- SIMPLE IRA: Same partial ERISA treatment as a SEP.
- Payroll deduction IRA: Not ERISA if the employer meets all four safe harbor conditions; full ERISA plan if the employer endorses the program or contributes money.
- Deemed IRA inside a 401(k) or 403(b): Subject to ERISA as part of the qualified employer plan.
- Rollover IRA: Not ERISA. Amounts rolled from an ERISA plan are protected without limit in bankruptcy but lose the anti-alienation shield outside bankruptcy.
- Inherited IRA: Not ERISA and not protected in federal bankruptcy.
- Owner-only SEP or solo 401(k): Not ERISA when no common-law employees participate.
- State auto-IRA (CalSavers, OregonSaves, etc.): Not ERISA; the state, not the employer, sponsors the program.