ERISA

At one time, there were relatively few rules protecting employees in their retirement plans. Employers have long been able to deduct the contributions they paid toward the pension plans they sponsored, but until the early 1970s employees had few guarantees that the benefits they were accruing would actually be there for them. That changed significantly in 1974, with passage of landmark federal legislation called the Employee Retirement Income Security Act — ERISA.

Just about everything we take for granted with respect to qualified retirement plans today stems from ERISA. Though it has been amended significantly since it was first signed into law, ERISA has come to represent the foundation of a qualified retirement plan. Among its most notable provisions, ERISA:

• Requires plans to provide participants with information about the plan, including important information about plan features and funding.
• Sets minimum standards for participation, vesting, benefit accrual, and funding.
• Requires plan sponsors to provide adequate funding for their plan.
• Requires accountability of plan fiduciaries.
• Gives participants the right to file suit to seek a remedy for certain situations.
• Guarantees payment of certain benefits if a defined benefit plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation (PBGC).

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