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:
As a practical matter, ERISA gives plan participants the following rights, according to the 401(k) Help Center:
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.
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.
Newsletter articles are posted every 2 weeks.
If you would like to have our e-newsletter delivered directly to your inbox, please sign up. Your information is confidential; you can unsubscribe at any time. Subscribe.