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
- Call toll free (877) 728-9741
- Visit The Spivak Law Firm, 16530 Ventura Boulevard Suite 312 Encino, CA 91436
- Fax (310) 499-4739
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