The Employee Retirement Income Security Act of 1974, or ERISA, is a federal law that sets minimum standards for retirement and welfare benefit plans in private industry. ERISA requires plans to provide participants with information about the plan; sets minimum standards for participation, vesting, benefit accrual and funding; ERISA establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan; ERISA requires accountability of plan fiduciaries; gives participants the right to sue for benefits and breaches of fiduciary duty; guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation.
If you are a plan participant, beneficiary, “plan participant”, or a dependent, enrolled in an ERISA-governed “employee welfare benefit plan”, ERISA has a very direct and profound effect upon your rights to receive plan benefits. If you do not follow certain procedures, then you may lose entitlement to your benefits. This is why it is important that you speak with an attorney that practices regularly in ERISA law.
ERISA provides for an exclusive remedial scheme for insureds who have been denied benefits. A plan participant may sue “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). In addition, they may be entitled to attorney fees and interest, but these are discretionary. 29 USC § 1132(g). Before a participant or beneficiary can bring a lawsuit for benefits under the plan, the participant must exhaust the administrative remedies available under the plan, known as appealing an adverse benefits determination. It is important to contact an attorney before the time limit to file an appeal, usually 180 days, lapses.
ERISA applies to two types of plans- Employee Welfare Benefit Plans and Employee Pension Benefit Plans. An Employee Welfare Benefit Plan is any plan, fund, or program established or maintained by an employer or by an employee organization, or by both, which provides any of the following benefits, through insurance or otherwise: – health insurance – group life insurance – long-term disability income – severance pay – funded vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services; and – any benefit described in section 302(c) of the Labor Management Relations Act (other than pensions on retirement or death) “Payroll practices” (see ER3) and certain group or group-type insurance programs with minimal employer or employee organization involvement are not included.
ERISA applies to two types of plans- Employee Welfare Benefit Plans and Employee Pension Benefit Plans. An Employee Pension Benefit Plan under ERISA isaAny plan, fund, or program established or maintained by an employer or by an employee organization, or by both, which provides retirement income to employees, OR results in a deferral of income by employees for periods extending to the termination of covered employment or beyond Employee Pension Benefit Plans include: – Profit-sharing retirement plans – Stock bonus plans – Money purchase plans – 401(k) plans – Employee stock ownership plans – Defined benefit retirement plans
Each plan has certain key elements. These include: – A written plan that describes the benefit structure and guides day-to-day operations; – A trust fund to hold the plan’s assets; – A recordkeeping system to track the flow of monies going to and from the retirement plan; and – Documents to provide plan information to employees participating in the plan and to the government.