Employee Retirement Income Security Act of 1974 (ERISA)
Definition - What does Employee Retirement Income Security Act of 1974 (ERISA) mean?
Employment Retirement Income Security Act of 1974 (ERISA) is a law in the US that sets standards for the management of retirement plans of employees. The purpose of this law is to ensure that the people entrusted with retirement funds will not misuse them. It also allows employers to have access to vital information regarding these plans such as eligibility for participation and the timetable for the accumulation of benefits.
Insuranceopedia explains Employee Retirement Income Security Act of 1974 (ERISA)
ERISA as a law came about with cases of mismanagement of the retirement plans of private employees. In the 20th century, laws were passed to curtail this problem. In 1921 and 1926 through the Revenue Acts, the government allowed employers to deduct from the salaries of the employers for the latter's pension plan. These deductions were not taxed. The Revenue Act of 1942 demanded disclosure. In 1959, through the Welfare and Pensions Disclosure Act, the US Department of Labor demanded descriptions of plans and annual financial reports. These descriptions and reports were also sent to plan participants and their beneficiaries. But ERISA further demanded more disclosure for the participants and more detailed government reports. Several laws after the passage of ERISA has strengthened it more. The Retirement Equity Act of 1984 decreases the maximum age in which an employee can avail of a retirement plan. The Pension Protection of Act of 2006 made pension plan funding more transparent through new notice requirements.
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