ERISA: Your Retirement Rights

The Employee Retirement Income Security Act of 1974 — better known as ERISA — is, according to the Department of Labor, "a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans." These typically include traditional pension plans, 401(k) plans, deferred-compensation plans and profit-sharing plans.

However, government and church plans, such as many 403(b) plans, and simplified employee pensions (SEPs) are not covered by ERISA. Sometimes, the status of a plan isn't clear; consult a professional if you're unsure about a plan you're enrolled in.
For those who are in an ERISA-covered plan, the government offers a lot of protections. 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.
• Sets minimum standards for participation, vesting, benefit accrual and funding. For example, ERISA defines how long you are required to have worked before becoming eligible to participate in a plan, to accumulate benefits and to have a nonforfeitable right to those benefits.
• Establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan.
• Requires accountability of plan fiduciaries. And what is a fiduciary? According to ERISA, it's 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 (that is, a traditional pension plan) is terminated, through a federally chartered corporation known as the Pension Benefit Guaranty Corporation.

As a practical matter, ERISA gives plan participants the following rights, according to the 401(k) Help Center: 

• To examine, for free, all plan documents, including insurance contracts, and copies of all documents filed by the plan with the DOL.
• To receive a summary of the plan's annual financial report.
• To obtain a statement telling you whether you have a right to receive a plan benefit. If you do not have a right to a plan benefit, you must be told how many more years you have to work to get a right to that benefit.

You may not be fired or discriminated against for insisting on your rights under ERISA.

Extra benefit: protection against creditors
The money you have in an ERISA-covered plan is technically not yours until you retire and take it out. That means your creditors can't get at it either. But before you start planning ways to take advantage of this provision, note that there are exceptions. An ex-spouse may be able to get access as part of a divorce settlement. And the IRS and other arms of the federal government can take their share for federal tax debt or federal fines and penalties.
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Non-ERISA plans do not get this level of protection, although IRAs may receive some protection under other laws.

This is just an introduction to a very wide-ranging and complicated law. If you think you're not getting the full benefits or information you're entitled to, contact the plan manager — or give us a call.