By Craig Eissler, CFP®, CIMA®, AIF®, Wealth Advisor

Often clients come to us with questions about retirement plans. This might concern a plan offered by their employer. Or a potential new retirement plan they’re considering as a business owner or self-employed individual. These discussions typically lead us down the path of discussing options: what they can or cannot do – and what is best for their situation.

Many retirement plans are governed by legislation known as the Employee Retirement Income Security Act (ERISA). Established in 1974 by Congress, ERISA was created to protect employees who invest in their company retirement plan. It was inspired by the collapse of auto manufacturer Studebaker’s pension plan.

The ERISA legislation both established the Pension Benefit Guaranty Corporation, or PBGC, and set the framework for companies to sponsor and maintain a sound retirement plan. Though initially established to govern private pensions, ERISA now governs many defined contribution plans, including 401k plans, as well as health plans. Our clients often ask us about what ERISA actually does – and whether their plan is covered by it.

Are all 401k plans subject to ERISA?

ERISA covers corporate pension plans and welfare benefit plans. To qualify under ERISA, a plan must be employer sponsored. A corporate 401k is an ERISA qualified retirement plan because it is employer defined and therefore employer sponsored. SEP and SIMPLE IRAs are also retirement plans sponsored by employers so therefore are ERISA qualified.

What protections does ERISA offer to participants?

Plan sponsors must design and administer their plans in accordance with ERISA. ERISA does not require employers to establish a retirement plan. Rather, it defines minimum standards for those that do establish and offer such plans to their employees.

Among other things, ERISA requires retirement plan sponsors to provide participants and beneficiaries with adequate information regarding their plan, including important information about plan features and funding. It establishes detailed funding rules that require plan sponsors to provide adequate funding for the plan.

Critically, this legislation also requires accountability of plan fiduciaries. All in all, ERISA requires that all parties acting in a fiduciary capacity must act in the best interests of the retirement plan participants. Not unlike how we, as fiduciary advisors, must act in the best interest of all our clients at all times.

Are Solo 401k plans subject to ERISA?

Not all retirement plans are subject to ERISA. Solo 401k plans are not typically classified as standard ERISA plans, because these plans are for business owners only. Solo 401k plans don’t include non-owner employees, so there are certain titles of ERISA that don’t apply to the Solo 401k. Traditional IRAs as well as Roth IRAs that are not sponsored by employers, and are initiated and governed by the individual, are also not ERISA qualified.

Be sure to work with a trusted professional

Retirement plans are plentiful out there. But they’re not all created equal. Work with a trusted partner who knows what is available to you and how to implement them to your unique situation. Your HH team would be happy to weigh in with options and answers for any retirement planning questions you may have.

Happy retirement planning!


Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.