The Employee Retirement Income Security Act (ERISA) is a federal law that establishes minimum requirements for retirement and health care plans of private companies. It protects employees and their beneficiaries by setting a higher standard for employers to follow if they offer voluntary plans to their employees. Because of ERISA, employers and designated plan administrators have a fiduciary duty to the employees who participate in the plan.
What are the duties of plan administrators?
ERISA requires the plan administrators to act in the employees’ best interests as they are the investors of the plan. As investors, the employees have the right to sue their employers or plan administrators for any breach of fiduciary duty. Here are the responsibilities of the plan administrator:
- Investing: The plan administrator manages the assets of the plan. They also control the deposits and timing of injecting employee contributions. As fiduciaries, they are responsible for making their investment decisions with the interests of the employees in mind.
- Reporting: Plan administrators must file a detailed annual report of the plan to the federal government. It should include informational returns as well as coverage updates and modifications.
- Disclosing: Plan administrators must share information with the employees participating in the plan. Plan participants can get regular updates and data regarding the plan upon request.
Companies must provide the plan participants with information and updates on the features and funding of the plan. ERISA prevents the plan administrators from misappropriating or misusing the funds.
Plan administrators do most of the work
When you have a plan governed by ERISA, your employers are answerable to the Department of Labor. They must provide clear disclosures and explicitly outline claim procedures to the federal government and plan participants. You should know when you can make a claim and how to maximize your benefits. ERISA is a law that safeguards the savings you worked so hard to accumulate.
