ERISA and Retirement Plan Law

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law administered by the U.S. Department of Labor (DOL). ERISA implements standards for private pension plans and welfare benefit plans. It plays an important role in protecting the retirement benefits of millions of American workers.

The Employee Benefits Security Administration (EBSA) enforces ERISA. ERISA does not require employers to have pension plans. However, it enforces rules for those that do. It's important to note that ERISA provisions only affect pension plans that began on or after Jan. 1, 1975.

ERISA requires regular disclosure of retirement plan features and performance. It also sets minimum standards for vesting and funding. This allows participants to sue for breaches of fiduciary duty. Read on to learn how ERISA affects the pension plans of private employees. FindLaw's ERISA section covers the basics of this federal law.

What Is ERISA?

ERISA furnishes guidelines to pension funds, insurance companies, and private employers. These guidelines mandate how to administer employee benefit plans. The law safeguards employees and aims to protect participants and beneficiaries of private pension plans.

ERISA does not cover government health plans. It also doesn't cover plans established by churches for their employees. Lastly, it doesn't cover state-regulated programs like unemployment or workers' compensation. ERISA doesn't require private employers to provide pension plans. However, it sets minimum standards for those that do. Pension plans include various types. The most common are defined benefit plans and defined contribution plans.

Under ERISA, plan sponsors and plan fiduciaries must act in the best interests of plan participants. They also have fiduciary responsibilities. This involves responsibly managing plan assets and providing accurate information about the plan.

Plan sponsors are also responsible for distributing a summary plan description (SPD) to plan participants. The SPD summarizes the plan's key features and provisions. It must be clear and understandable. The SPD is an important communication tool between the plan administrator and the participant.

ERISA Amendments

It's important to note a few significant amendments to ERISA. One significant amendment is the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA ensures that employees who become unemployed under certain circumstances continue to receive health care coverage.

The Health Insurance Portability and Accountability Act (HIPAA) is another amendment to ERISA. HIPAA limited the preexisting medical condition exception for health insurance coverage. It also established a period of six months prior to enrollment during which the development of a new condition could not be deemed preexisting.

Lastly, there's the Affordable Care Act (ACA). The ACA primarily impacts ERISA by introducing new requirements for employer-sponsored health plans. ERISA plans must comply with various ACA provisions. For instance, an ERISA health plan must provide coverage for preventative services without cost sharing. The ACA also requires that plan participants get certain plan documents, like a summary of benefits and coverage.

Common ERISA Violations

ERISA imposes requirements on employers that administer employee pension, retirement, or health insurance plans. These include the obligation to provide plan participants with:

• Key information about the plan's features and financing
• Fiduciary duties for those who manage assets covered by the plan
• Procedures for employee grievances, including an appeal process

ERISA also permits employees to sue employers or plan administrators for withholding benefits or breach of fiduciary duties.

Common ERISA violations include:

• Improperly denying benefits to current or former employees
• Breaching the fiduciary duty held toward employees covered by the plans
• Interference with the rights of an employee covered by the plan

ERISA Penalties

When an employer violates ERISA, there are two ways that penalties may be incurred. An aggrieved plan beneficiary can file a complaint against a violator. This begins the administrative procedure to seek corrective action and eventually leads to a lawsuit. The other way is for EBSA to initiate an action against the employer.

ERISA violations may result in both civil and criminal penalties. Fines can range from monetary penalties to significant financial consequences. In extreme cases, criminal charges may be pursued. This can result in imprisonment for individuals found guilty of fraud or embezzlement related to ERISA-regulated plans.

Consult With a Lawyer About ERISA

When facing issues related to ERISA, an experienced employment law attorney can help. Some employment law attorneys specialize in ERISA law. A lawyer can represent your interests in ERISA litigation and ensure that your plan assets are protected. Reach out to an ERISA attorney near you today for more information.