ERISA got enacted in the 1970s to protecting worker’s rights for retirement accounts that get backed by employers. As such, certain plans are exempt from ERISA, including IRAs and government pensions in New Jersey.
What Standards do Employers Under ERISA Need to Meet?
The Employee Benefits Security Administration oversees and sets qualifications for employers to meet standards that protect the rights of workers. For a company to sponsor ERISA, they need to meet these qualifications. For one thing, they must report shares and dividends with the government and need to receive adequate funding in order to get covered under ERISA. The employers must also share accurate information with the employees on what benefits get covered in their employer-backed plan. Should the employer fail to do so, they could get held liable and get sued.
What Types of Accounts Get Covered Under ERISA?
As mentioned before, ERISA only covers certain employer-backed accounts. Therefore, accounts such as individual retirement accounts are not covered, since the individual has to open it and not the employer. Accounts that get backed by ERISA include private long-term disability, 401(k)s, profit-sharing plans, and more. In some cases, it may even cover things like HRAs, which are healthcare reimbursement accounts and life insurance.
What is the Main Role of ERISA for Employer Plans?
The main role of ERISA is to back an employee’s hard-earned retirement through a corporation known as the Pension Benefit Guaranty Corporation. This corporation ensures that even if the corporation itself fails, the employee will still receive the retirement they got promised under the defined ERISA account.
ERISA is an act that helps protect American workers in the private sector from losing their retirement income. Having this protection in place is useful not in keeping employers accountable, but in protecting the rights of workers.