If you’re like many people in Texas who have only started looking into pensions and retirement plans recently, you may be overwhelmed with information. When you see ERISA written, you simply ask, “What is that?” This is a good question, because ERISA does a lot to protect your funds and your future.
ERISA stands for the Employment Retirement Income Security Act of 1974. This act protects the assets you place in a retirement plan during the time when you’re working. That way, when you’re ready to retire, it’s there for you. ERISA is a federal law, and it has set minimum standards for pension plans in the private industry.
An ERISA plan specifies many important things about your pension. For instance, it will say how long you need to work for a company before you’re eligible for a plan, how long you need to work before you get a nonforfeitable interest in your pension, how long you can leave your job before it affects the pension and if your spouse has a right to your pension in the event of death. ERISA generally applies only to plans that were started on or after January 1, 1975.
The one thing ERISA does not do is require your employer to provide pension or retirement plans. All it does is requires those who do have plans to meet standards that make sure your money stays safe in the long run. Additionally, the law doesn’t state how much money you’ll be paid as a benefit of being involved in the pension plan. If you have questions about how ERISA affect you, speaking with someone familiar with pension plans may be of benefit to you.
Source: United States Department of Labor, “Frequently Asked Questions (FAQs)” Nov. 27, 2014