South Carolina Life and Health Practice Exam

Which employer is required to follow ERISA regulations?

1. A local electrical supply company with 12 employees

2. A national corporation with 200 employees

3. A non-profit organization

4. A government agency

The correct answer is: A local electrical supply company with 12 employees

The Employee Retirement Income Security Act (ERISA) applies to specific types of employers and their employee benefits plans, particularly those that offer pension or health plans. In general, ERISA covers private sector employers and certain non-profit organizations but does not apply to government agencies or solely to smaller employers under specific thresholds. In the context of the choices given, the correct answer pertains to the national corporation with 200 employees. They are required to follow ERISA regulations since the act specifically governs employee benefit plans offered by private employers, regardless of size. Employers that have 75 or more participants and that are engaged in commerce or trade must comply with ERISA's regulations. While a local electrical supply company with 12 employees might be small, if they have an employee benefit plan, they still fall under ERISA; however, many aspects of ERISA may not be relevant until certain thresholds regarding the number of employees or types of plans are met. Non-profit organizations generally have to follow ERISA as well, provided they maintain employee benefit plans. Government agencies are explicitly exempt from ERISA's requirements. Thus, understanding the context of ERISA's applicability illustrates that the correct identification of which employer is required to adhere to ERISA would be the national corporation with 200 employees