|
The Employee Retirement Income Security Act of 1974 (ERISA) (Pub.L. 93-406, 88 Stat. 829, September 2, 1974) is an American federal statute that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan; by establishing standards of conduct for plan fiduciaries; and by providing for appropriate remedies and access to the federal courts. This article or section does not adequately cite its references or sources. ...
The United States Statutes at Large, commonly referred to as the Statutes at Large, is the official source for the laws and resolutions passed by Congress. ...
is the 245th day of the year (246th in leap years) in the Gregorian calendar. ...
Year 1974 (MCMLXXIV) was a common year starting on Tuesday (link will display full calendar) of the 1974 Gregorian calendar. ...
An Act of Vaginapenis is a bill or resolution adopted by both houses of the United States Congress to which one of the following events has happened: Acceptance by the President of the United States, Inaction by the President after ten days from reception (excluding Sundays) while the Congress is...
Tax rates around the world Tax revenue as % of GDP Part of the Taxation series The federal government of the United States imposes a progressive tax on the taxable income of individuals, corporations, trusts, decedents estates, and certain bankruptcy estates. ...
The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion...
The United States federal courts are the system of courts organized under the Constitution and laws of the federal government of the United States. ...
ERISA is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the Internal Revenue Code and ERISA itself. The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes...
Responsibility for the interpretation and enforcement of ERISA is divided among the Labor Department of Labor, the Department of the Treasury (particularly the Internal Revenue Service), and the Pension Benefit Guaranty Corporation. The United States Department of Labor is a Cabinet department of the United States government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. ...
The U.S. Treasury building today. ...
Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series “IRS†redirects here. ...
The Pension Benefit Guaranty Corporation (or PBGC) is an independent agency of the United States government created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance...
History
The history of ERISA can be said to have begun in 1961 when President John F. Kennedy created the President's Committee on Corporate Pension Plans. The movement for pension reform gained some momentum when the Studebaker Corporation, an automobile manufacturer, closed its plant in 1963; the pension plan was so poorly funded that former employees received only 15% of the pensions they had been promised. For other uses, see President of the United States (disambiguation). ...
John Kennedy and JFK redirect here. ...
Studebaker Corporation, or simply Studebaker, was a United States wagon and automobile manufacturer based in South Bend, Indiana. ...
“Car†and “Cars†redirect here. ...
In 1967, Senator Jacob Javits proposed legislation that would address the funding, vesting, reporting, and disclosure issues identified by the presidential committee. His bill was opposed by business groups and labor unions, both of whom sought to retain the flexibility they enjoyed under pre-ERISA law. Federal courts Supreme Court Chief Justice Associate Justices Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Politics Portal The United States Senate is one of the two chambers of the bicameral United States Congress, the...
Jacob Koppel Jack Javits (May 18, 1904 – March 7, 1986) was a liberal New York politician. ...
A trade union or labor union is an organization of individuals associated through employment, or labour. ...
A turning point in the history of ERISA came in 1970, when NBC broadcast Pensions: The Broken Promise, an hour-long television special that showed millions of Americans the consequences of poorly funded pension plans and onerous vesting requirements. In the following years, Congress held a series of public hearings on pension issues and public support for pension reform grew significantly. The National Broadcasting Company (NBC) is an American television network headquartered in the GE Building in New York Citys Rockefeller Center. ...
A television special is a television program, typically a short film or television movie, which interrupts or temporarily replaces programming normally scheduled for a given time slot. ...
ERISA was enacted in 1974 and signed into law by President Gerald Ford on September 2, 1974 — Labor Day. In the years since 1974, ERISA has been amended repeatedly. For other persons named Gerald Ford, see Gerald Ford (disambiguation). ...
is the 245th day of the year (246th in leap years) in the Gregorian calendar. ...
Year 1974 (MCMLXXIV) was a common year starting on Tuesday (link will display full calendar) of the 1974 Gregorian calendar. ...
This article is about the holiday in the United States. ...
Coverage
Pension plans ERISA does not require employers to establish pension plans. Likewise, as a general rule, it does not require that plans provide a minimum level of benefits. Instead, it regulates the operation of a pension plan once it has been established.
Under ERISA, pension plans must provide for vesting of employees' pension benefits after a specified minimum number of years. ERISA requires that the employers who sponsor plans satisfy certain minimum funding requirements. In law vesting is to give an immediately secured right of present or future enjoyment. ...
ERISA also regulates the manner in which a pension plan may pay benefits. For example, a defined benefit plan must pay a married participant's pension as a "joint-and-survivor annuity" that provides continuing benefits to the surviving spouse unless both the participant and the spouse waive the survivor coverage. This article does not cite any references or sources. ...
The Pension Benefit Guaranty Corporation was established by ERISA to provide coverage in the event that a terminated defined benefit pension plan does not have sufficient assets to provide the benefits earned by participants. Later amendments to ERISA require an employer who withdraws from participation in a multiemployer pension plan with insufficient assets to pay all participants' vested benefits to contribute the pro rata share of the plan's unfunded vested benefits liability. For ERISA defined benefit pension plans, the plan may be terminated by the []employer if the employer can demonstrate that it is fully funded and can purchase annuity contracts for the accrued benefits for all its employees or it may be terminated by the PBGC (Pension Benefit Guaranty Corporation) if...
Health benefit plans ERISA does not require that an employer provide health insurance to its employees or retirees, but it regulates the operation of a health benefit plan if an employer chooses to establish one. It has been suggested that Health plan be merged into this article or section. ...
There have been several significant amendments to ERISA concerning health benefit plans:
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits a health benefit plan from refusing to cover an employee's pre-existing medical conditions in some circumstances. It also bars health benefit plans from certain types of discrimination on the basis of health status, genetic information, or disability.
Other relevant amendments to ERISA include the Newborns' and Mothers' Health Protection Act, the Mental Health Parity Act, and the Women's Health and Cancer Rights Act. The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a law passed by the U.S. Congress that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment. ...
The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. ...
Newborns and Mothers Health Protection Act The Newborns’ and Mothers’ Health Protection Act of 1996 (the Newborns’ Act), signed into law on September 26, 1996, requires plans that offer maternity coverage to pay for at least a 48-hour hospital stay following childbirth (96-hour stay in the case of...
Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ...
The Women’s Health and Cancer Rights Act (WHCRA), signed into law on October 21, 1998, contains protections for patients who elect breast reconstruction in connection with a mastectomy. ...
During the 1990s and 2000s, many employers who promised lifetime health coverage to their retirees have limited or eliminated those benefits. ERISA does not provide for vesting of health care benefits in the way that employees become vested in their accrued pension benefits. Employees and retirees who were promised lifetime health coverage may be able to enforce those promises by suing the employer for breach of contract, or by challenging the right of the health benefit plan to change its plan documents in order to eliminate those promised benefits.
Pension vesting Before ERISA, some defined benefit pension plans required decades of service before an employee's benefit became vested. It was not unusual for a plan to provide no benefit at all to an employee who left employment before retirement (age 65 or perhaps age 55), regardless of the length of the employee's service.
As of 2007, employees' benefits in a defined benefit pension plan must become vested at 100% after five years or under a seven-year graded-vesting schedule (20% a year for each year of service beginning with the third year of service and ending with 100% after seven years).
Under the Pension Protection Act of 2006, employer contributions made after 2006 to a defined contribution plan must become vested at 100% after three years or under a six-year graded-vesting schedule (20% a year for each year of service beginning with the second year of service and ending with 100% after six years). Different rules apply with respect to employer contributions made before 2007. Employee contributions are always 100% vested. The Pension Protection Act of 2006 (Pub. ...
This article does not cite any references or sources. ...
Pension funding Under ERISA, minimum funding requirements were established for defined benefit plans. By their nature, defined contribution plans are always fully funded, even if the employee has not yet become vested in the employer contributions.
Before the Pension Protection Act (PPA), a defined benefit plan maintained a "funding standard account", which was charged annually for the cost of benefits earned during the year and credited for employer contributions. Increases in the plan's liabilities due to benefit improvements, changes in actuarial assumptions, and any other reasons were amortized and charged to the account; decreases in the plan's liabilities were amortized and credited to the account. Every year, the employer was required to contribute the amount necessary to keep the funding standard account from falling below $0 at year-end. For other uses of Amortization, see the Amortization disambiguation page. ...
In 2008, when the PPA funding rules go into effect, single-employer pension plans will no longer maintain funding standard accounts. The funding requirement under PPA is simply that a plan must stay fully funded (that is, its assets must equal or exceed its liabilities). If a plan is fully funded, the minimum required contribution is the cost of benefits earned during the year. If a plan is not fully funded, the contribution also includes the amount necessary to amortize over seven years the difference between its liabilities and its assets. Stricter rules apply to severely underfunded plans (called "at-risk status").
The PPA has different funding requirements for multiemployer pension plans, which preserve most of the pre-PPA funding rules including the funding standard account. Under PPA, increases and decreases in the plan's liabilities will be amortized, but the amortization period for benefit improvements adopted after 2007 will be shortened. As with single-employer plans, multiemployer pension plans that are significantly underfunded are subject to restrictions. The restrictions, which may limit the plan's ability to improve benefits or require the plan to reduce employees' benefits, vary depending whether a pension plan's funding status is termed "endangered", "seriously endangered", or "critical". The restrictions accompanying each deficient funding status are progressively more severe as funding status worsens.
ERISA pre-emption ERISA Section 514 preempts all state laws that relate to any employee benefit plan, with certain, enumerated exceptions. The most important exceptions — i.e. state laws that survive despite the fact that they may relate to an employee benefit plan — are state insurance, banking, or securities laws, generally applicable criminal laws, and domestic relations orders that meet ERISA's qualification requirements. In the legal system of the United States, preemption generally refers to the displacing effect that federal law will have on a conflicting or inconsistent state law. ...
A major limitation is placed on the insurance exception, known as the "deemer clause", which essentially provides that state insurance law cannot operate on employer self-funded benefit plans. The Supreme Court has created another limitation on the insurance exception, in which even a law regulating insurance will be pre-empted if it purports to add a remedy to a participant or beneficiary in an employee benefit plan that ERISA did not explicitly provide. (cf. Aetna Health Inc. v. Davila, 542 U.S. 200 [2004]).
Title I: Protection of Employee Benefit Rights Title I protects employees' rights to their benefits. The following are some of the ways in which it achieves that goal: - Participants must be provided plan summaries.
- Employers are required to report information about the plan to the Labor Department and provide it to participants upon request. The information is reported on Form 5500, which is available for public inspection and may be viewed at websites such as freeERISA.com and Free5500.com.
- If a participant requests, the employer must provide the participant with a calculation of her or his accrued and vested pension benefits.
- Employers have fiduciary responsibility to the participants and to the plan.
- Certain transactions between the employer and the plan are prohibited.
- A pension plan is barred from investing more than 10% of its assets in employer securities.
Title I also includes the pension funding and vesting rules described above.
Title II: Amendments to the Internal Revenue Code Relating to Retirement Plans Title II amended the Internal Revenue Code (IRC). The changes include the following: - The addition of various requirements for a pension plan to be tax-favored ("qualified"), including:
- the plan must offer retirees the option of a joint-and-survivor annuity,
- benefits under the plan may not discriminate in favor of officers and highly-paid employees,
- and plans are subject to the pension funding and vesting rules described above.
- The imposition of a maximum limit on the annual benefit that may be paid from a qualified defined benefit pension plan and the annual amount that may be contributed to a qualified defined contribution pension plan.
- Revision of the rules concerning the maximum tax deduction allowed with respect to a contribution to a pension plan.
- The imposition of an excise tax if the employer fails to make a required contribution to a pension plan or engages in transactions prohibited by ERISA.
Tax rates around the world Tax revenue as % of GDP Part of the Taxation series An Individual Retirement Account (or IRA) is a retirement plan account that provides some tax advantages for retirement savings in the United States. ...
A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. ...
Look up Excise tax in the United States in Wiktionary, the free dictionary. ...
Title III: Jurisdiction, Administration, Enforcement; Joint Pension Task Force, Etc. Title III outlines procedures for co-ordination between the Labor and Treasury Departments in enforcing ERISA.
It also created the Joint Board for the Enrollment of Actuaries, which licenses actuaries to perform a variety of actuarial tasks required of pension plans under ERISA. The Joint Board administers two examinations to prospective Enrolled Actuarys. After an individual passes the two exams and completes sufficient relevant professional experience, she or he becomes an Enrolled Actuary. The Joint Board for the Enrollment of Actuaries licenses actuaries to perform a variety of actuarial tasks required of pension plans in the U.S. by the Employee Retirement Income Security Act of 1974 (ERISA). ...
Damage from Hurricane Katrina. ...
An Enrolled Actuary is an actuary who has been licensed by a Joint Board of the Department of Treasury & Department of Labor in the U.S. to perform a variety of actuarial tasks that are required for pension plans in the U.S, according to Employee Retirement Income Security Act...
Title IV: Plan Termination Insurance Title IV created the Pension Benefit Guaranty Corporation (PBGC) to insure benefits of participants in underfunded terminated plans. It also describes the procedures that a pension plan must follow in order to terminate.
Single-employer plans
Standard termination An employer may terminate a single-employer plan under a standard termination if the plan's assets equal or exceed its liabilities. If the assets are less than the liabilities, the employer must contribute the amount necessary to fully fund the plan. A standard termination is sometimes referred to as a voluntary termination because the employer has chosen to terminate the plan.
In a standard termination, all accrued benefits under the plan become 100% vested. The plan must purchase annuity contracts for all participants. If the plan permits the payment of lump sums, employees may be offered the choice of a lump sum payment or an annuity. Annuity contracts are offered by organizations and individuals that may accumulate value and take a current value and pay it out over a period of years. ...
If any assets remain in the plan after a standard termination has been completed, the provisions of the plan control their treatment. In some plans, the excess assets revert to the employer; in other plans, the excess assets must be used to increase participants' benefits. In theory, a conversion is an agreement such that one party takes ownership of a piece of property from another under the understanding that the ownership will revert to the second party when an agreed event occurs. ...
Distress termination An employer may terminate a single-employer plan under a distress termination if the employer demonstrates to the PBGC that: - the employer is facing liquidation under bankruptcy proceedings,
- the costs of continuing the plan will cause the business to fail, or
- the costs of continuing the plan have become unreasonably burdensome solely because of a decline in the employer's workforce.
If the PBGC finds that a distress termination is appropriate, the plan's liabilities are calculated and compared with its assets. Depending on the difference between the two values, the termination may be treated as if it had been a standard termination or as if it had been initiated by the PBGC. The United States Constitution (Article 1, Section 8, Clause 4), authorizes Congress to enact uniform Laws on the subject of Bankruptcies throughout the United States. ...
Termination initiated by the PBGC PBGC may initiate proceedings to terminate a single-employer plan if it determines that: - the employer has not made its minimum required contributions to the plan,
- the plan will not be able to pay benefits when due, or
- PBGC's long-term cost can be expected to be unreasonably higher if it does not terminate the plan.
A termination initiated by the PBGC is sometimes called an involuntary termination.
The benefits paid by the PBGC after a plan termination may be less than those promised by the employer. See Pension Benefit Guaranty Corporation for details. The Pension Benefit Guaranty Corporation (or PBGC) is an independent agency of the United States government created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance...
Multiemployer plans A multiemployer plan may be terminated in one of three ways: - It may be amended so that participants receive no credit for future service,
- All contributing employers may withdraw from the plan or stop making contributions to it, or
- It may be converted into a defined contribution plan.
Non-ERISA status and bankruptcy In 2005, Public Law 109-8[1] amended the Bankruptcy Code, by exempting most organised retirement plans, even those not subject to ERISA, and accorded them protected status, claimable as exempt property by a debtor declaring bankruptcy under the U.S. Bankruptcy Code. The United States Constitution (Article 1, Section 8, Clause 4), authorizes Congress to enact uniform Laws on the subject of Bankruptcies throughout the United States. ...
Now, most pension plans have the same protection as an ERISA anti-alienation clause giving these pensions the same protection as a spendthrift trust. The only remaining unprotected areas are the SIMPLE IRA and the SEP IRA... The SEP IRA is functionally similar to a self-settle trust, and a sound policy reason would exist to not shield SEP IRAs, but many financial planners argue that a rollover (or direct transfer) from a SEP IRA to a rollover IRA would give those funds protected status, too. An Anti-alienation clause specifies that the beneficial owner cannot transfer property away. ...
A spendthrift trust is a trust that is created for the benefit of a person who is in debt (often because they are unable to control their spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit...
A SIMPLE IRA is a type of employer provided retirement plan in the United States. ...
A Simplified Employee Pension Individual Retirement Account is a variation of the Individual Retirement Account used in the United States. ...
Finding statutes Portions of ERISA are codified in various places of the United States Code, including 29 U.S.C. ch.18, and Internal Revenue Code sections § 219 and § 408 (relating to the Individual Retirement Account) and sections § 410 through § 415, and § 4971, § 4974 and § 4975. A cross-reference between the sections of the ERISA law and the corresponding sections in the U.S.Code can be found at http://www.harp.org/erisaxref.htm. In law, codification is the process of collecting and restating the law of a jurisdiction in certain areas, usually by subject. ...
The United States Code (U.S.C.) is a compilation and codification of the general and permanent federal law of the United States. ...
Title 29 of the United States Code is a code that outlines labor in the United States. ...
The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes...
Tax rates around the world Tax revenue as % of GDP Part of the Taxation series An Individual Retirement Account (or IRA) is a retirement plan account that provides some tax advantages for retirement savings in the United States. ...
See also The Pension Benefit Guaranty Corporation (or PBGC) is an independent agency of the United States government created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance...
The Employee Benefits Security Administration (EBSA) is an agency of the U.S. Department of Labor responsible for administering the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). ...
The United States Constitution (Article 1, Section 8, Clause 4), authorizes Congress to enact uniform Laws on the subject of Bankruptcies throughout the United States. ...
External links |
Feeds |
Contact