A retirement plan is subject to ERISA (Employee Retirement Income Security Act) if it meets certain criteria or conditions. ERISA is a federal law that sets standards for private sector employee benefit plans, including retirement plans. Here are the key factors that determine whether a retirement plan is covered by ERISA:
1. Employer Involvement: ERISA generally applies to retirement plans that are established or maintained by employers. This means that plans set up by individual employees, such as Individual Retirement Accounts (IRAs), are not subject to ERISA.
2. Employee Participation: ERISA covers retirement plans that are offered to employees. Plans that only cover self-employed individuals or partners in a partnership are generally not subject to ERISA.
3. Minimum Number of Participants: ERISA applies to retirement plans that have at least one participant who is an employee. Plans with only self-employed individuals or partners in a partnership are exempt from ERISA.
4. Minimum Benefit Requirements: ERISA generally covers retirement plans that provide ongoing benefits to participants. Plans that only provide lump-sum payments or benefits that are payable only upon death, disability, or termination of employment may not be subject to ERISA.
5. Funding Method: ERISA covers retirement plans that are funded through employer contributions or a combination of employer and employee contributions. Plans that are solely funded by employee contributions, such as voluntary employee contributions to a 401(k) plan, may not be subject to ERISA.
It's important to note that while most employer-sponsored retirement plans are subject to ERISA, there are some exceptions and variations based on factors such as the size of the employer and the type of plan. Additionally, certain governmental and church plans are exempt from ERISA.
Please consult with a qualified retirement plan professional or legal advisor for specific guidance on your situation, as retirement plan requirements can be complex and may vary depending on your circumstances.