What is ERISA?
The Employee Retirement Income Security Act of 1974 (“ERISA”) is a federal law governs most pension and health plans in the private sector that provide protection for individuals through these plans.
ERISA requires plans to provide their participants with plan information including important information about plan funding and features, and fiduciary responsibilities for those who manage and control plan assets.
Most importantly, ERISA gives participants the right to sue for benefits and breaches of fiduciary duty.
According to the United States Department of Labor, ERISA does the following:
- Requires plans to provide participants with information about the plan including important information about plan features and funding. The plan must furnish some information regularly and automatically. Some is available free of charge, some is not.
- Sets minimum standards for participation, vesting, benefit accrual and funding. The law defines how long a person may be required to work before becoming eligible to participate in a plan, to accumulate benefits, and to have a non-forfeitable right to those benefits. The law also establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan.
- Requires accountability of plan fiduciaries. ERISA generally defines a fiduciary as anyone who exercises discretionary authority or control over a plan\’s management or assets, including anyone who provides investment advice to the plan. Fiduciaries who do not follow the principles of conduct may be held responsible for restoring losses to the plan.
- Gives participants the right to sue for benefits and breaches of fiduciary duty.
- Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation.
ERISA does not state with specificity how much money a participant must be paid as a benefit.