Employee Retirement Income Security Act of 1974 (ERISA)

Jurisdiction and status

ERISA is US federal law. Its definitions are in section 3 (29 U.S.C. 1002), including defined contribution plans (3(34)), defined benefit plans (3(35)), fiduciaries (3(21)) and the statutory plan-asset rule (3(42), added in 2006). The Department of Labor's plan asset regulation, 29 CFR 2510.3-101, applies section 3(42) to investments in funds. Both are in force. The regulation has not been amended since section 3(42) was added; its own definition of benefit plan investor (paragraph (f)(2)) still reaches plans not subject to Title I, and section 3(42) supplies the narrower statutory definition used for the 25% test: plans subject to Part 4 of Title I, plans subject to Internal Revenue Code section 4975, and entities holding plan assets.

Which investors are covered

Multiemployer plans are jointly trusteed by employer and union representatives under section 302(c)(5) of the Labor Management Relations Act. Governmental plans are outside Title I (ERISA section 4(b)(1)) and outside Internal Revenue Code section 4975 (section 4975(g)(2)).

Fiduciary status and prohibited transactions

Under section 3(21)(A), a person is a fiduciary to the extent it exercises discretionary authority or control over plan management, exercises any authority or control over the management or disposition of plan assets, renders investment advice for a fee, or has discretionary authority or responsibility in plan administration. ERISA section 404(a)(1) requires fiduciaries to act solely in the interest of participants and beneficiaries and with the care, skill, prudence and diligence of a prudent person, and ERISA section 406 and Internal Revenue Code section 4975 prohibit a wide range of transactions between a plan and related "parties in interest" unless an exemption applies. Ordinary private-fund practices, such as transactions with affiliated funds, performance-based compensation and fee arrangements with the manager's affiliates, can be difficult to reconcile with those rules, which is why funds work to avoid holding plan assets.

Class exemptions provide relief for specified transactions. Prohibited transaction exemption (PTE) 84-14, the qualified professional asset manager (QPAM) exemption, gives broad relief for plan and IRA transactions with parties in interest carried out through investment funds managed by a QPAM. The Department of Labor's amendment published on 3 April 2024 (89 FR 23090) and effective on 17 June 2024 raises the QPAM equity and asset-management thresholds in steps between 2024 and 2030, with annual inflation adjustments after that, and requires a QPAM to notify the Department once, by email, that it is relying on the exemption.

How private funds manage ERISA

A fund's options are set by the plan asset regulation:

• keep benefit plan investors below 25% of the value of each class of equity, tested after every acquisition of an interest;
• operate as a venture capital operating company (VCOC) or real estate operating company (REOC), which is common for buyout, growth, venture and value-add real estate funds;
• accept plan-asset status and run the fund in compliance with ERISA, which some credit and separately managed account structures do.

In documents this shows up as ERISA questions in the subscription agreement, transfer restrictions and excuse rights in the limited partnership agreement, management-rights letters to plan investors for VCOC purposes, and ERISA-specific side letter terms.

Legal definition and market usage

In market usage "ERISA money" often means any US pension money. Legally, only private-sector plans subject to Title I are ERISA plans, and for the 25% test the relevant class is "benefit plan investors", which adds IRAs and plan-asset entities and excludes governmental plans. Fundraising teams that count a public pension commitment toward an ERISA cap overstate their exposure.

Not the same as

• Plan Assets: Plan assets is the ERISA concept that decides whether a fund's own holdings are treated as a plan's assets; ERISA is the statute as a whole.
• Public Pension Fund: Public pension funds are governmental plans outside ERISA Title I and are not benefit plan investors.
• Unrelated Business Taxable Income (UBTI): Unrelated business taxable income (UBTI) is a tax rule that reaches tax-exempt investors, including ERISA plans; ERISA governs plan fiduciaries and plan assets.

Common mistakes

• Treating public pension plans as ERISA plans or counting them toward the 25% test.
• Leaving IRAs and plan-asset feeder funds out of the benefit plan investor count.
• Assuming the 25% test is checked only at final close. It applies after each acquisition of an equity interest.

Edge cases

• A plan-asset fund of funds counts toward the 25% test only to the extent of the share of its equity held by benefit plan investors.
• Debt instruments without substantial equity features are not equity interests for the plan asset regulation.

Questions

Sources

1. 29 U.S.C. 1002 - Definitions (ERISA sec. 3, incl. 3(34), 3(35), 3(42)). U.S. Congress (United States Code; LII mirror), Current US Code text as published by LII (accessed 2026-10-01); para. (42) added by Pub. L. 109-280, sec. 611(f) (2006). Status: in force (checked 2026-10-01). 29 U.S.C. 1002, ERISA sec. 3(21), 3(32), 3(34), 3(35), 3(42) — supports: Definitions of fiduciary, governmental plan, DC and DB plans; statutory 25% plan-asset rule and benefit plan investor definition
2. 29 CFR 2510.3-101 - Definition of "plan assets" - plan investments (plan asset regulation). U.S. Department of Labor, Employee Benefits Security Administration (CFR text via eCFR; LII mirror), eCFR current as of 2026-09-29; no amendment since eCFR baseline. Status: in force (checked 2026-10-01). 29 CFR 2510.3-101(a), (d), (e), (f) — supports: Plan asset regulation: look-through, VCOC/REOC exceptions, 25% significant-participation test
3. 29 U.S.C. 186 - Restrictions on financial transactions (LMRA sec. 302, incl. 302(c)(5) Taft-Hartley trust funds). U.S. Congress (United States Code; LII mirror), Current US Code text as published by LII (accessed 2026-10-01). Status: in force (checked 2026-10-01). 29 U.S.C. 186(c)(5) (LMRA sec. 302(c)(5)) — supports: Jointly trusteed multiemployer (Taft-Hartley) funds
4. Fact Sheet: Final Amendment to PTE 84-14, the QPAM Exemption. U.S. Department of Labor, Employee Benefits Security Administration, April 2024. Status: in force (amended exemption) (checked 2026-10-01). Fact sheet (April 2024) — supports: QPAM exemption and 2024 amendment
5. 29 U.S.C. 1003 - Coverage (ERISA sec. 4, incl. 4(b) exclusions for governmental and church plans). U.S. Congress (United States Code; LII mirror), Current US Code text as published by LII (accessed 2026-10-01). Status: in force (checked 2026-10-01). 29 U.S.C. 1003(a), (b)(1), (2), (4) (ERISA sec. 4) — supports: Title I covers private-sector employer and union plans; governmental plans, church plans without an election and plans maintained outside the US for nonresident aliens are excluded
6. 29 U.S.C. 1104 - Fiduciary duties (ERISA sec. 404). U.S. Congress (US Code via LII), Current US Code text as published by LII (accessed 2026-10-02). Status: in force (checked 2026-10-02). 29 U.S.C. 1104(a)(1)(A)-(B) (ERISA sec. 404(a)(1)) — supports: Exclusive-purpose and prudence duties
7. 29 U.S.C. 1106 - Prohibited transactions (ERISA sec. 406). U.S. Congress (US Code via LII), Current US Code text as published by LII (accessed 2026-10-02). Status: in force (checked 2026-10-02). 29 U.S.C. 1106(a)(1), (b) (ERISA sec. 406) — supports: Prohibited transactions with parties in interest; self-dealing
8. 26 U.S.C. 4975 - Tax on prohibited transactions. U.S. Congress (Internal Revenue Code; LII mirror, govinfo for subsection (g)), Current US Code text (LII; govinfo USCODE-2023 for (g)), accessed 2026-10-02. Status: in force (checked 2026-10-02). 26 U.S.C. 4975(e)(1), (g)(2)-(3) — supports: IRAs and qualified plans subject to Code prohibited-transaction rules; governmental and non-electing church plans excluded
9. 29 CFR 2510.3-2 - Employee pension benefit plan (incl. (d) individual retirement accounts). U.S. Department of Labor (CFR text via LII mirror), Current CFR text as published by LII (accessed 2026-10-02). Status: in force (checked 2026-10-02). 29 CFR 2510.3-2(d)(1) — supports: IRAs without employer involvement are not Title I pension plans
10. Amendment to Prohibited Transaction Class Exemption 84-14 for Transactions Determined by Independent Qualified Professional Asset Managers (the QPAM Exemption), 89 FR 23090. U.S. Department of Labor, Employee Benefits Security Administration (Federal Register via govinfo), Published 2024-04-03; effective 2024-06-17. Status: in force (checked 2026-10-02). 89 FR 23090 (DATES; Section I(k); Section VI(a)) — supports: QPAM amendment effective 2024-06-17; one-time reliance notice; phased threshold increases 2024-2030

• Unrelated Business Taxable Income (UBTI)
• Side Letter
• Pension Fund
• Plan Assets

• Institutional Investor
• Investment Consultant
• LP-Led Secondary
• Most Favored Nation (MFN) Clause
• Outsourced Chief Investment Officer (OCIO)
• Real Estate (Asset Class)