Employee Retirement Income Security Act
In 1974 Congress enacted
the Employee Retirement Income Security Act (ERISA). ERISA's main
purpose was to protect workers who had worked for substantial
periods under pension plans.
ERISA's provisions are set out in the Labor and Tax Codes. Congress has amended ERISA several times since its initial enactment. In addition, the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) have issued various regulations and rulings to implement the statutes. Finally, decisions by the courts have created an extensive body of law interpreting the statutes and regulations.
In order to be a qualified plan, a plan must provide rights for employees in the following areas:
DISCLOSURE. Plans must give participants basic
plan documents and make other documents available to participants
COVERAGE. Plans must include a certain proportion of (but not all) employees.
PARTICIPATION. Workers "covered" by a plan who meet certain requirements must be given an opportunity to become plan members.
VESTING. Participants who work specified periods of time earn nonforfeitable rights to receive pensions at retirement.
BENEFIT ACCRUAL. Plans are generally required to give benefit credit for all years of plan participation.
NONDISCRIMINATION. The dollar value assigned to each year of benefit credit must conform to nondiscrimination rules aimed at preventing excessive weighting in favor of higher-paid and older employees.
SURVIVORS BENEFITS. Plans are required to provide benefits for widows and widowers of plan participants, although this protection can be given up if both husband and wife agree.
BENEFITS FOR DIVORCED SPOUSES. Plans must pay pensions to former spouses if directed to do so by a specific kind of court order.
DISTRIBUTIONS. Participants have rights as to the timing and form of payment of their pensions.
FIDUCIARY STANDARDS. Persons administering pension plans or investing plan assets are subject to mandatory standards of conduct.
APPEALS OF BENEFIT DENIALS. There are procedures for participants to appeal adverse pension benefit decisions, first to the plan, and then, if necessary, to the courts.
REMEDIES. ERISA provides that courts can award certain remedies for violations of the law.
NON-INTERFERENCE WITH BENEFIT RIGHTS. Plans may not use discharges, layoffs, plant closings, or other means to interfere with participants' attaining their benefits under a pension plan.
REPORTING. Each plan is required to report detailed financial and actuarial data regularly to the IRS. This data may be made available to participants.
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