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Employee Retirement Income Security Act (ERISA)

The law that regulates the operation of private pensions and benefit plans.
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Employee Retirement Income Security Act of 1974

Legislation in the United States, passed in 1974, that established a number of regulations to ensure that employers and other involved parties do not misuse the funds entrusted to them in retirement accounts. Among other provisions, the Act requires retirement account managers to provide information to account holders on a regular basis. It also sets standards for managers' use of discretionary authority and allows account holders to sue their pensions for unpaid benefits.
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Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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References in periodicals archive ?
The complaint against United Healthcare alleges violations of the Racketeer Influenced and Corrupt Organizations Act and the Employment Retirement Income Security Act. Backstom said the lawsuit stems from complaints the firm received from individual enrollees over the last year.
The Department of Labor is responsible for the administration and enforcement of the Employment Retirement Income Security Act (ERISA) which governs approximately 2.5 million private sector health plans that cover about 125 million Americans.
Changes to retirement provisions increase the maximum employee investment in the 401(k) savings plan to the limit established by the Employment Retirement Income Security Act (ERISA).
THE DEPARTMENT OF LABOR is currently working on final regulations regarding default investment options in tax qualified plans subject to the Employment Retirement Income Security Act of 1974.
This legislation also would have removed an unnecessary Employment Retirement Income Security Act impediment to pension fund investment in rated commercial real estate securities.
Finally, in the course of federal reform, Section 514 of the Employment Retirement Income Security Act (ERISA) is likely to be amended to allow state reforms to proceed unfettered by ERISA preemption and to restore the remedy of extracontractual damages for bad faith claim denials that Pilot Life and its progeny destroyed.

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