Retirement Plans, Benefits and Your Savings
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.
ERISA requires plans to provide participants with plan information including important information about plan features and funding. In addition it also does the following:
• sets minimum standards for participation, vesting, benefit accrual and funding
• provides fiduciary responsibilities for those who manage and control plan assets
• requires plans to establish a grievance and appeals process for participants to get benefits from their plans
• gives participants the right to sue for benefits under certain circumstances; and, if a defined benefit plan is cancelled or terminated, it guarantees payment of certain benefits through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation - PBGC.
In general, ERISA does not cover retirement plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws. ERISA also does not cover plans maintained outside the U.S., primarily for the benefit of nonresident aliens or unfunded excess benefit plans.
The Employee Retirement Income Security Act (ERISA) requires plan administrators — the people who run plans — to give plan participants in writing the most important facts they need to know about their retirement and health benefit plans including plan rules, financial information, and documents on the operation and management of the plan. Some of these facts must be provided to participants regularly and automatically by the plan administrator. Others are available upon request, free-of-charge or for copying fees. The request should be made in writing.
One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered retirement or health benefit plan or a beneficiary receiving benefits under such a plan, is a summary of the plan, called the summary plan description or SPD. The plan administrator is legally obligated to provide to participants, free of charge, the SPD. The summary plan description is an important document that tells participants what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits becomes vested, when and in what form benefits are paid, and how to file a claim for benefits. If a plan is changed, participants must be informed, either through a revised summary plan description, or in a separate document, called a summary of material modifications, which also must be given to participants free of charge.
If participants are unable to get the summary plan description, the summary annual report or the annual report from the plan administrator, they may be able to obtain a copy by writing to the U.S. Department of Labor, EBSA, Public Disclosure Room, Room N-1513, 200 Constitution Avenue, N.W., Washington, D.C. 20210, for a nominal copying charge. Participants should provide their name, address and phone number to enable EBSA to contact them to follow up on the request.
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