What is the Employee Retirement Income Security Act of 1974?
ERISA is a federal law specifically aimed at providing protection to participants in employee benefit plans and their beneficiaries. The most important parts of ERISA for retirement plan purposes are the following: Title I, which imposes eligibility, coverage, vesting, and fiduciary responsibility requirements on retirement benefits; Title II, which amended parts of the Code to impose eligibility, coverage, and vesting requirements on tax-qualified retirement plans; and Title IV, which established the Pension Benefit Guaranty Corporation (PBGC) and plan termination insurance. Title I of ERISA lists which plans are covered by ERISA, outlines the claims procedures applicable to ERISA plans, preempts much state law, provides standards of fiduciary responsibility, imposes reporting and disclosure requirements, and contains the legal remedies available to individuals. ERISA is the most significant source of relief for a executive who believes that he or she is being treated unfairly with respect to a plan. ERISA regulates a variety of employee benefit plans, although some significant classes of plans are exempted from its coverage. Both ERISA and the Code contain comprehensive restrictions on the ability of the business owner to design a plan entirely at his or her own discretion. To some extent, the burden of these requirements can be lightened by using standardized plans.