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Employee Retirement Income Security Act (ERISA)
Employee Retirement Income Security Act of 1974
Employee Retirement Income Security Act (ERISA).
This comprehensive law, best known by the acronym ERISA, governs qualified retirement plans, including most private-company defined benefit and defined contribution plans, and protects the rights of the employees who participate in the plans.
ERISA also established individual retirement arrangements (IRAs), made it easier for self-employed people to set up retirement plans, and made employee stock ownership plans part of the tax code.
Among ERISA requirements are that plan participants receive a detailed document that explains how their plan operates, what employee rights are -- including qualifying to participate and uniform vesting schedules -- and what the grievance and appeals process is.
In addition, ERISA assigns fiduciary responsibility to those who sponsor, manage, and control plan assets. This means they must act in the best interests of the plan participants. ERISA rules do not apply to plans provided by federal, state, or local governments, church plans, or certain other plans.
ERISA has been amended several times since it was passed in 1974, making some provisions more flexible and others more restrictive. Among the changes were the Consolidated Omnibus Budget Reconciliation Act (COBRA), which provides continuing access to coverage, for a fee, when an employee leaves an employer who offers health insurance, and the Health Insurance Portability and Accountability Act (HIPAA), which protects access to health insurance coverage for employees and their families with pre-existing medical conditions when the employee leaves a job that provided coverage and moves to a new job where coverage is also offered.