Most employees have heard about ERISA, but many may not understand the basic facts that it covers. The legislation itself was dubbed ERISA after the Employee Retirement Income Security Act which came into law in 1974. This particular law was designed to protect retirees, oversee complex retirement and benefit plans, provide an additional umbrella of care for healthcare or long-term disability recipients. Additionally, ERISA covers employee pension benefit plans, like retirement and 401(k) plans.
One important thing to note is that Employers are not legally required to provide benefit plans but find that hiring and keeping employees is difficult without them. Accordingly, if employers do provide these types of benefits, they must comply with the provisions set out by ERISA. Here are some additional parts of ERISA and how they may apply to your retirement benefits.
ERISA legislation dictates that one or more fiduciaries must be designed for each retirement benefit plan. These fiduciaries then have the authority to administer, control and dictate the terms of your benefit plan. Fiduciary can employ others to assist with the plan responsibilities, but ultimately, the fiduciary maintains a strong financial resposibility to administer the plan correctly and honestly.
ERISA also sets some very specific rules that fiduciaries have to follow:
1) Fiduciaries must properly diversify the plan’s investments to minimize losses whenever possible.
2) Fiduciaries must act in the best interests of plan participants and beneficiaries of the plan.
3) Fiduciaries must act with same care that “a prudent person” would use when acting in the same capacity. This includes, but is not limited to getting professional help in certain areas if necessary.
4) Fiduciaries must follow the plan documents to be consistent with ERISA requirements.
5) Fiduciaries must avoid prohibited transactions, like those that might offer the potential for transactions that allow insider abuse.
What Happens If A Fiduciary Violates The Rules?
If a fiduciary breaches their ERISA duties, they can be held personally liable. If the breach causes losses, the fiduciary can be sued and must help the plan recover its losses.
ERISA rules are undeniably complex and the penalties for not properly following them can be very severe. This is why many plan sponsors seek expert assistance to set up and administer retirement plans properly. If you have questions about ERISA and how its provisions apply to your plan, it is important to talk to a qualified and knowledgable expert. Contact us today for more information about ERISA and how we can help you.
Are you dealing with a difficult ERISA case? Do you live in the Houston, TX area? If so, that J. Price McNamara could be the right ERISA attorney to help you with your case. J. Price McNamara and his firm of professional legal staff has exceptional knowledge of ERISA law so that you can get the outcome you desire for your case. The Law Office of J. Price McNamara is ready and waiting to help you with your ERISA case so that you can rest easy with your retirement. Call us today to schedule your free case review and get peace of mind with help from Attorney McNamara.
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