What Does the ERISA Act Address? Plans, Fiduciaries, and Claims

ERISA covers most retirement and health benefit plans offered by private-sector employers, along with group life insurance, disability coverage, and similar welfare benefits. The Employee Retirement Income Security Act of 1974 does not require any employer to offer a plan, but once a plan exists, ERISA controls how it is funded, managed, disclosed, and enforced. Roughly 153 million workers and their families rely on plans that fall under it.¹ If you work for a private company and receive benefits through your job, ERISA is very likely the federal law that shapes what those benefits look like and what you can do when something goes wrong.

Which Plans and Employers Are Covered

ERISA reaches two broad categories of employer-sponsored plans. The first is retirement plans, including traditional pensions and defined contribution accounts like 401(k)s. The second is welfare benefit plans, which cover group health insurance, dental and vision coverage, disability insurance, and group life insurance.¹

Several categories sit outside ERISA entirely:

Plans sponsored by federal, state, or local government employers.
Church plans, unless the sponsoring religious organization voluntarily elects ERISA coverage.
Workers’ compensation and unemployment insurance, which are governed by separate statutes.
Payroll practices such as sick pay, vacation pay, and paid time off paid from the employer’s general assets.

The distinction matters for workers at public universities, government agencies, and religious institutions. If your plan is outside ERISA, the federal protections described below do not apply, and state law fills the space instead. A 403(b) plan at a private nonprofit generally falls under ERISA, but the same type of plan at a public school or church does not.

Retirement Plan Protections

The rules that apply to your retirement plan depend on whether the employer has promised you a specific benefit or is simply funding an individual account.

Defined Benefit Pensions and PBGC Insurance

A defined benefit pension promises a fixed monthly payment at retirement, typically based on salary and years of service. Because the employer bears the investment risk, ERISA requires these plans to meet strict funding targets backed by regular actuarial valuations, and an excise tax applies when contributions fall behind.²³

When a defined benefit plan terminates without enough money to pay everyone, the Pension Benefit Guaranty Corporation steps in. The PBGC is a federal corporation funded by employer premiums rather than tax dollars, and it insures pensions up to a statutory cap.² For plans terminating in 2026, the maximum monthly guarantee for someone retiring at age 65 is about $7,790 under a straight-life annuity.⁴ Workers who retire earlier receive less; those retiring later can receive more. If your promised pension was higher than the cap, you would only receive the guaranteed portion.

401(k) and Other Defined Contribution Plans

In a 401(k), your account balance depends on contributions and investment returns rather than a guaranteed formula. ERISA requires plan assets to sit in a separate trust, segregated from the employer’s business funds. Because the employer does not promise a specific retirement income, PBGC insurance does not apply to these plans. Your protection comes instead from the fiduciary rules, disclosure requirements, and anti-alienation protections described below.

Participation and Vesting

A pension plan cannot require you to be older than 21 or to have completed more than one year of service before you become eligible to participate.⁵ A plan can require up to two years of service if it provides 100 percent immediate vesting for employer contributions.

Starting in 2025, the SECURE 2.0 Act extended 401(k) participation to long-term part-time workers. If you have worked at least 500 hours per year for two consecutive years and have reached age 21, your employer’s 401(k) plan must let you contribute.⁶ Before this change, many part-time employees never hit the standard 1,000-hour threshold and were shut out entirely.

Money you contribute from your own paycheck is always fully yours. Employer contributions can be subject to a vesting schedule, and ERISA gives defined contribution plans two options:

Cliff vesting: you own none of the employer contributions until you complete three years of service, at which point you are 100 percent vested.
Graded vesting over six years: 20 percent after two years, 40 percent after three, 60 percent after four, 80 percent after five, and 100 percent after six.

These are the statutory minimums.⁷ Many employers vest faster, and some offer immediate full vesting. Knowing your plan’s schedule before making a career move can matter, because leaving early on a cliff schedule means walking away from the match entirely.

Health and Welfare Plan Protections

ERISA’s disclosure and fiduciary requirements apply just as strictly to health plans, dental and vision plans, group life insurance, and disability coverage as they do to retirement accounts.

Mental Health Parity

ERISA-covered health plans cannot impose less favorable terms on mental health and substance use disorder treatment than they impose on medical and surgical care. Under the Mental Health Parity and Addiction Equity Act, financial requirements like copays and deductibles, and treatment limits like visit caps, must be no more restrictive for behavioral health than for comparable medical services.⁸

COBRA Continuation Coverage

If you lose employer-sponsored health coverage because of a qualifying event, COBRA gives you the right to continue that coverage temporarily at your own expense. COBRA applies to employers with 20 or more employees. Leaving a job or having your hours reduced generally triggers up to 18 months of continued coverage. Divorce from a covered employee, or the death of a covered employee, gives dependents up to 36 months.⁹ The coverage matches what active employees get, but you pay the full premium plus a 2 percent administrative fee.

Summary of Benefits and Coverage

Every group health plan must provide a Summary of Benefits and Coverage in a standardized format so you can compare plans directly. The SBC has to describe deductibles, copays, and coinsurance, along with coverage examples for common situations like having a baby or managing a chronic condition. Plans must deliver it at enrollment, at renewal, and within seven business days of any request.¹⁰

Fiduciary Duties

Anyone who exercises discretionary authority over a plan’s management, assets, or administration is an ERISA fiduciary, regardless of job title. Fiduciaries must manage the plan with the care, skill, and diligence that a knowledgeable person in similar circumstances would use, diversify investments to minimize the risk of large losses, and act exclusively for the benefit of plan participants.¹¹ They cannot put the employer’s interests ahead of yours.

A fiduciary who breaches these duties is personally liable to restore any losses and return any profits gained by misusing plan assets, and courts can remove the fiduciary outright.¹² The Department of Labor can also assess a civil penalty of 20 percent of any amount recovered through settlement or court order.¹³

Separately, ERISA and the Internal Revenue Code prohibit certain dealings between a plan and “disqualified persons,” a group that includes fiduciaries, the sponsoring employer, and their relatives. Selling or leasing property to the plan, lending between the plan and a disqualified person, and using plan assets to benefit a disqualified person are all off limits, and the IRS enforces the ban with escalating excise taxes.¹⁴

Fiduciaries must also monitor what service providers charge. Recordkeepers, investment managers, and consultants that qualify as covered service providers must disclose in writing all direct and indirect compensation they receive, and identify who is paying them when the money comes from somewhere other than the plan itself.¹⁵

Protection From Creditors

Your ERISA-covered retirement plan assets are generally beyond the reach of creditors. The law requires every pension plan to include an anti-alienation provision that blocks the assignment of benefits, and the Supreme Court has confirmed that this protection extends to bankruptcy. Ordinary creditors, credit card companies, and most civil judgments cannot touch your ERISA retirement account.

The protection is not absolute. Specific exceptions apply:

A Qualified Domestic Relations Order from a divorce or child support proceeding can direct the plan to pay a portion of your benefits to a spouse, former spouse, or dependent child.
The IRS can reach ERISA plan assets to collect unpaid federal taxes.
Federal courts can order garnishment to satisfy criminal fines and restitution.
Loans secured by your account balance, where the plan permits them, are a permitted exception.

ERISA plans are meaningfully more protected than IRAs, which depend on a separate and generally weaker set of federal bankruptcy protections and varying state exemptions.

The Information You Must Receive

ERISA’s disclosure regime rests on the idea that workers cannot protect their benefits without knowing what those benefits are.

Every participant must receive a Summary Plan Description, a plain-language document explaining how the plan works, what benefits it offers, how to file a claim, and what could cause you to lose benefits. New participants must get the SPD within 90 days of becoming covered.¹⁶ When the plan changes in a significant way, the administrator must distribute a Summary of Material Modifications within 210 days after the close of the plan year in which the change was adopted.¹⁷ For group health plans that reduce covered services, the deadline drops to 60 days from the date of the change.

Plan administrators also file a Form 5500 each year with the Department of Labor, laying out the plan’s assets, liabilities, and operations. Plans with 100 or more participants generally must include an independent CPA audit. Late or missing filings carry civil penalties of roughly $2,700 per day.¹ Form 5500 filings are public, so anyone can look up a plan’s financial condition through the Department of Labor’s online system.

Claims, Appeals, and What You Can Recover

Every ERISA plan must have a written process for filing benefit claims and challenging denials. When a claim is denied, the plan administrator must send a written notice explaining the specific reasons, the plan provisions relied on, and what more you would need to submit.¹⁸ You have the right to a full and fair internal review.

Timeframes vary by claim type. Health plan pre-service claims must be decided within 15 days and post-service claims within 30 days. Urgent care claims must be decided within 72 hours, and if the plan needs more information, it has to ask within 24 hours.¹⁹ Disability and pension claims run on longer timelines. In every case, you must complete the internal appeals process before going to court.

Once you exhaust appeals, you can sue in federal court under ERISA Section 502(a) to recover benefits due, enforce your rights, or clarify your entitlement to future benefits.¹³ The remedies available, though, are narrower than most people expect. Courts have consistently read Section 502(a) to allow recovery of the denied benefit and “appropriate equitable relief,” excluding compensatory damages for emotional distress, consequential damages, and punitive damages. If a health plan wrongly denied coverage for a needed surgery and you were harmed by the delay, your ERISA recovery is generally limited to the cost of the coverage itself.

That limitation is tied to ERISA’s preemption clause. Section 514 overrides any state law that “relates to” a covered benefit plan, a phrase courts have read broadly to sweep aside state consumer protection laws, bad faith insurance claims, and most state contract and tort theories that touch an ERISA plan.²⁰ A “savings clause” preserves state laws regulating insurance, banking, and securities, but that mostly protects state oversight of insurance companies as entities, not additional remedies for plan participants. Preemption lets nationwide employers run a single plan without navigating 50 sets of rules, and the tradeoff for individual workers is fewer legal tools when a benefit is wrongly denied.

1
U.S. Department of Labor. Employee Retirement Income Security Act (ERISA)
2
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
3
Internal Revenue Service. Defined Benefit Plan
4
Pension Benefit Guaranty Corporation. Maximum Monthly Guarantee Tables
5
Office of the Law Revision Counsel. 29 USC 1052 – Minimum Participation Standards
6
Internal Revenue Service. Notice 2024-73
7
Office of the Law Revision Counsel. 29 USC 1053 – Minimum Vesting Standards
8
Centers for Medicare and Medicaid Services. The Mental Health Parity and Addiction Equity Act (MHPAEA)
9
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
10
eCFR. 45 CFR 147.200 – Summary of Benefits and Coverage and Uniform Glossary
11
Office of the Law Revision Counsel. 29 USC 1104 – Fiduciary Duties
12
Office of the Law Revision Counsel. 29 USC 1109 – Liability for Breach of Fiduciary Duty
13
Office of the Law Revision Counsel. 29 USC 1132 – Civil Enforcement
14
Office of the Law Revision Counsel. 26 USC 4975 – Tax on Prohibited Transactions
15
U.S. Department of Labor. Final Regulation Relating to Service Provider Disclosures Under Section 408(b)(2)
16
Internal Revenue Service. 401(k) Resource Guide Plan Participants – Summary Plan Description
17
eCFR. 29 CFR 2520.104b-3 – Summary of Material Modifications
18
U.S. Department of Labor. Benefit Claims Procedure Regulation FAQs
19
eCFR. 29 CFR 2560.503-1 – Claims Procedure
20
Office of the Law Revision Counsel. 29 USC 1144 – Other Laws