Accredited Wealth Management Advisor Practice Exam

Which of the following statements is true regarding ERISA and SERPs?

1. ERISA applies fully to SERPs with no exceptions

2. SERPs are always unfunded

3. SERPs are subject only to reporting and disclosure requirements

4. Beneficiaries of SERPs have creditor protection under ERISA

The correct answer is: SERPs are subject only to reporting and disclosure requirements

The correct statement regarding ERISA (Employee Retirement Income Security Act) and SERPs (Supplemental Executive Retirement Plans) is that SERPs are subject only to reporting and disclosure requirements. SERPs are non-qualified retirement plans that are designed to provide additional retirement benefits to select employees, typically executives. These plans are not subject to the same comprehensive regulatory framework as qualified plans under ERISA, which generally impose stricter funding and participation standards. Instead, while SERPs must comply with certain reporting and disclosure requirements under ERISA, they enjoy more flexibility in their design and implementation. This limited regulatory oversight is a significant characteristic that distinguishes SERPs from qualified plans. In contrast, the other statements do not accurately reflect the nature of SERPs. For example, not all SERPs are unfunded; some can be funded with assets. Moreover, ERISA does apply to certain aspects of SERPs, but it does not offer the same level of protection or regulation as it does for qualified plans. Lastly, beneficiaries of SERPs do not necessarily have the same type of creditor protection that ERISA provides for qualified plans, making the assertion incorrect regarding their protection under the Act.