Pensions (ERISA)

The Employee Retirement Income Security Act of 1974, or ERISA, protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. If an employer maintains a pension plan, ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a nonforfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death.

The law requires plans to pay retirement benefits no later than the time a participant reaches normal retirement age. But, many plans, including 401(k) plans, provide for earlier payments under certain circumstances. For example, a plan's rules may provide that participants in a 401(k) plan would receive payment of his or her benefits after terminating employment.

ERISA protects plans from mismanagement and misuse of assets through its fiduciary provisions. ERISA defines a fiduciary as anyone who exercises discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan's investment committee.

Generally, if you are enrolled in a 401(k), profit sharing or other type of defined contribution plan (a plan in which you have an individual account), your plan may provide for a lump sum distribution of your retirement money when you leave the company.

However, if you are in a defined benefit plan (a plan in which you receive a fixed, pre-established benefit) your benefits begin at retirement age. These types of plans are less likely to contain a provision that enables you to withdraw money early.Whether you have a defined contribution or a defined benefit plan, the form of your pension distribution (lump sum, annuity, etc.) and the date your pension money will be available to you depend upon the provisions contained in your plan documents. Some plans do not permit distribution until you reach a specified age. Other plans do not permit distribution until you have been separated from employment for a certain period of time. In addition, some plans process distributions throughout the year and others only process them once a year. You should contact your pension plan administrator regarding the rules that govern the distribution of your pension money.

ERISA requires that plans disclose when you begin to participate in the plan, how your service and benefits are calculated, when your benefit becomes vested, when you will receive payment and in what form, and how to file a claim for benefits.

For a free consultation with an experienced employee rights attorney, contact David Spivak:

  • Email David@SpivakLaw.com
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  • Visit The Spivak Law Firm, 9454 Wilshire Blvd., Ste 303, Beverly Hills, CA 90212
  • Fax (310) 499-4739

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