chapter nineteen employment retirement security act
TRANSCRIPT
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Myths About ERISA
1. Your pension plans are not protected against the trustees who administer them
2. If you put money into a retirement plan, it will be there when you retire
3. If you put money into a retirement plan, it will not be there when you retire
4. ERISA applies only to retirement or pension funds
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Statutory Basis
Employee Retirement Income Security Act allows for civil action by participants or beneficiaries to recover benefits or enforce rights under the terms of his or her plan
It prohibits interference with those rights protected under such plans
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Who is Covered
Any employer that offers welfare benefit plans to its employees is covered by ERISA
Most private sector plans are covered
Generally, plans maintained by governmental entities or churches are not covered
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Types of Plans to Which ERISA Applies
ERISA covers employee benefit plans– Welfare plans– Pension plans
Defined benefit contribution plans Defined benefit plans
Qualified plans must be permanent, in writing and communicated, must have assets held in trust, and must exclusively benefit employees and beneficiaries
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ERISA Regulations
Reporting and disclosure– Summary plan descriptions– Annual reports
Fiduciary duty– Fiduciary is one who holds funds in
trust for another– Must handle funds in best interests of
participants
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Eligibility and vesting rules– All employees over 21 and with one
year of employment are eligible– Vesting is acquiring a right or interest
that is irrevocable by the donor Employees vested after 5 – 7 years
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)– Allows temporary continuation of health
care coverage– Covers retrieval of pension funds by
employers
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Health Insurance Portability and Accountability Act (HIPAA)– Limits preexisting exclusions in health
care plans– Protects individual health information
from inappropriate use Funding requirements of defined
benefit plans are set forth under ERISA
Also covers modification of existing retirement plans
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Enforcement of ERISA
Enforced by Department of Labor and Internal Revenue Service
Plaintiffs may only file for relief under ERISA– State common-law claims are
preempted Some ERISA claims may also be
violations of ADEA
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Management Considerations
Don’t assume compliance; maintain consistent review
Although retirement fund opportunities are not required, they are subject to ERISA if offered
Be careful of matching employee contributions with company stock
Stay abreast of changing legislation