Definition of Plan. Although it is a key concept, ERISA does not provide a
helpful definition of the word “plan.”6 One court has indicated that a “plan” exists if four
conditions are met: “the existence of intended benefits, intended beneficiaries, a source of
financing, and a procedure to apply for and collect benefits.”7 The courts have stated that a plan
may exist even if there is no formal writing.8 Since a written plan is not required, the
establishment or existence of a plan can be shown by acts or events that indicate the existence of
a plan.9 In light of this broad definition, an employer may offer a benefit to one or more
employees and not realize that it must comply with various ERISA requirements. For example,
an employer may sign an employment contract or a bonus agreement deferring the payment of
compensation that may subject the employer to various ERISA requirements.
Types of Plans. ERISA applies to “employee welfare benefit plans” and
“employee pension benefit plans.”10 An “employee welfare benefit plan” provides participants
with one or more of the following benefits: “medical, surgical, or hospital care or benefits, or
benefits in the event of sickness, accident, disability, death or unemployment. . . .”11 Welfare
benefit plans are not subject to the ERISA rules on vesting, participation or funding, but
generally are subject to the reporting, disclosure, and fiduciary duty requirements.12 An
“employee pension benefit plan” is defined, in part, as follows:
[A]ny plan, fund, or program...established or maintained by an
employer or by an employee organization...to the extent that by its
express terms or as a result of surrounding circumstances such
plan, fund, or program —
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods
extending to the termination of covered employment or
beyond. . . .13
Clearly, many non-qualified deferred compensation (“NQDC”) arrangements will fall
within this broad definition of “employee pension benefit plan” because NQDC arrangements
will be designed to provide retirement income to the employee or to defer income at least until
6 See ERISA § 3(3), 29 U.S.C. § 1002(3) (defining “plan” as an employee welfare benefit plan or an
employee pension benefit plan).
7 Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir. 1982) (to be subject to ERISA, the plan must
cover p artici pants because of t heir em ploy ee stat us, offer o ne or mo re of the b enefit s descri bed in
ERISA, and the plan must be established or maintained by an employer or employee association).
9 Id. at 1373. Note that NQDC plans su bject to IRC § 409A are now required to be in writing to avoid tax
penalties as discussed in Chapter III, “Income Tax C onsequences of NQDC for the Empl oyee.”
10 ERISA § 3(1), (2), 29 U.S.C. § 1002(1),(2).
11 ERISA § 3(1), 29 U.S.C. § 1002(1).
12 ERISA §§ 201(a)(1) (participation and vesting), 301(a)(1) (funding); see Blau, 748 F.2d at 1352.
13 ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A) (emphasis added).