What is ERISA?
The Employee Retirement Income Security Act of 1974, commonly called ERISA, is a law that helps protect workers who participate in employer-sponsored health and retirement plans. The law establishes standards that employers must follow when creating and administering a retirement plan. It also regulates the fiduciaries of employer-sponsored retirement plans to prevent them from misusing funds.
ERISA in More Detail
Under ERISA, employer-sponsored retirement plans must meet minimum standards for participation, vesting, benefit accrual, and funding of the plan. These standards set how long an employer may require an employee to work before they’re eligible for the plan and accumulate benefits. The law also requires employers to provide plan participants with important information about the plan.
Regulated plans under ERISA include 401(k) plans, defined-benefits plans, employee stock ownership plans (ESOPs), and profit-sharing plans. Certain healthcare plans, like health maintenance organization (HMO) plans and flexible spending accounts (FSAs), are also included in the regulation.
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