What You Should Know About Your Retirement Plan, U.S. Department of Labor, November 2006

A. ERISA

Employee Retirement Income Security Act of 1974
Known by the acronym ERISA, this federal law governs the operation of qualified plans. It establishes rules that qualified plans must follow to protect plan assets for participants.

It applies to most private employer and union sponsored retirement plans. Excluded are federal, state and local government plans and most church plans. Rules may also differ for plans negotiated under collective bargaining agreements.

Watch out for questions about how ERISA applies to traditional and Roth IRAs. It doesn't. Individual IRAs are not employer-sponsored plans, and therefore do not fall under ERISA. SIMPLE and SEP IRAs do.

ERISA does not require an employer to maintain a retirement plan, but if the employer does, ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a non-forfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death.

  • Pension Benefit Guaranty Corporation (PBGC) - A federally chartered corporation created by ERISA that guarantees payment of pension benefits if a pension plan is terminated. The PBGC is funded by insurance premiums paid by the sponsors of employee retirement plans.

Maximum annual benefit guarantee - $59,318.16 for 2014 ($4,943.18 monthly).

B. Department of Labor

Regulations
The U.S. Department of Labor is responsible for enforcing the provisions of ERISA. The Employee Benefits Security Administration (EBSA) is the Department of Labor arm that oversees ERISA provisions that govern the conduct of plan fiduciaries, the investment and protection of plan assets, the reporting and disclosure of plan information, and participants' rights and responsibilities.



Fiduciary Liability Issues

Related Articles
  1. Taxes

    Are You ERISA Compliant? Follow This Checklist

    Following a checklist can make achieving compliance with Employee Retirement Income Security Act of 1974 (ERISA) requirements much less burdensome.
  2. Investing

    401(k) Lawsuits: How Employers Are Protecting Themselves

    Some companies are making it harder for employees to sue over retirement fund problems. Here is what you need to know about the trend.
  3. Financial Advisor

    An Overview Of The Pension Benefit Guaranty Corporation (PBGC)

    Find out how this "retirement lifeguard" can save drowning plans, and why it's unlikely to be a long-term solution to the pension problem.
  4. Financial Advisor

    The 401(k) and Qualified Plans Tutorial

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  5. Retirement

    Is Your Defined-Benefit Pension Plan Safe?

    Your plan may not last in a rocky market. Find out whether your savings will be affected.
  6. Financial Advisor

    Bankruptcy Protection For Your Accounts

    Will the plan assets you've worked hard for be safe if you experience a personal financial crisis?
  7. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
  8. Retirement

    Chipping Away At The Pension Freeze Trend

    Learn five steps that'll put your retirement back into your own hands.
  9. Retirement

    Florida's Surprisingly Flexible State Retirement System

    Retired Florida employees can choose a 401(k)-style investment plan or a traditional pension.
  10. Understanding Rules on Defined Benefit Pension Plans

    Defined benefit plans offer advantages to both employers and employees. Employers must understand the federal tax rules when establishing these plans.
Trading Center