Pension Fund and 401(k) Plan Basics under ERISA
Retirement benefit protection under federal law
Since its inception, the Employee Retirement Income Security Act of 1974 (ERISA) has been helping workers throughout the United States by setting minimum standards for private industry retirement plans. ERISA helps ensure that funds placed into retirement plans are actually in place when an individual’s retirement begins.
While there is no requirement that employers provide pension benefits to employees—or that they contribute to existing plans—they must comply with ERISA when they choose to provide such benefits. If you believe your employer is not complying with ERISA’s requirements, speak to an pension attorney in Nashville, Tennessee with the experience to assess your concerns. The law firm of Peter T. Skeie & Associates can help.
The two basic types of retirement plans
Employee retirement plans typically fall under two categories:
- Defined benefit plans: These plans are designed to ensure that participants receive a specific monthly benefit upon retirement. Although the benefit can be promised as a precise dollar amount per month, monthly benefits usually are calculated based on salary and service.
- Defined contribution plans: Rather than promise a specific monthly benefit amount, these plans are set up so participants—and, optionally, employers—contribute to the plan, often at a set rate. The funds are invested on behalf of the participants, and account values fluctuate based on investment gains or losses. One example of a defined contribution plan is a 401(k) plan, under which participants can make investment decisions for their own accounts.
ERISA is designed to ensure honest handling of your retirement accounts
Particularly in the case of defined contribution plans, no rules can guarantee the safety of retirement investments. Rather, the purpose of ERISA is to help ensure your accounts are designed and managed in a fair and honest manner by setting certain standards, such as the following:
- Information requirements: Each plan must regularly provide participants with information about the plan, including its features and funding.
- Participation standards: Minimum standards must be followed when establishing participation requirements, vesting requirements, accrual of benefits, and funding.
- Accountability: Fiduciaries—the individuals who control management or assets in a plan or provide investment advice to the plan—must follow certain principles of conduct and may be held responsible for restoring losses to the plan when they do not comply with ERISA accountability requirements.
- Recourse for participants: When that fiduciary duty has been breached, participants have the right to sue.
- Guarantees upon termination of a plan: If a plan is terminated, plans must guarantee payment of certain benefits through the Pension Benefit Guaranty Corporation.
If you believe your employer’s retirement plan does not comply with ERISA rules, you should seek legal assistance immediately. Do not wait for retirement to contact our Nashville pension attorneys—it is important to address concerns early in the process to ensure that the funds are available when you need them later in life.
Experienced Nashville, Tennessee pension fund lawyer helps you get the benefits you deserve
Because ERISA is a complex law, it is vital that you consult experienced Nashville employee benefits attorneys if you have any concerns that your retirement plan is not being handled honestly and effectively.
Nashville ERISA attorney Peter T. Skeie represents workers throughout Tennessee in ERISA claims. For any legal claim related to this law, please call 615-313-9111 or contact the firm online to schedule a free initial consultation.