Understanding ERISA Law & How It Can Help You Invest
The Employee Retirement Income Security Act (ERISA) is a federal law passed in 1974 that sets minimum standards for most voluntarily established pension and health plans in private industry. ERISA applies only to people working for private industry, not to government workers, and is intended to provide protection for individuals in these plans.
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ERISA outlines a number of ways for individuals to transfer funds from one qualified plan to another. The provisions in ERISA are designed to make it easier for those who are switching from one job to another to move their money without cashing out their 401(k) or IRA.
Here’s where ERISA may interest BiggerPockets fans: Since the 1974 ERISA laws came into being, it is possible for your IRA and other qualified accounts to own real estate. However, the provisions for these plans can get somewhat complicated, and navigating your way through them can be a headache.
Guidelines & Minimum Standards
The law requires that these pension and health plans:
- Inform company employees about plan features and funding
- Establish minimum standards for participation, vesting, benefit accrual, and funding
- Give financial responsibility to those managing and controlling plan assets
- Include a grievance and appeals process for workers to get their benefits
- Give workers the right to sue for benefits and for failure to maintain financial responsibilities
- Guarantee that workers will be paid certain benefits by a corporation established by the federal government (Pension Benefit Guaranty Corporation) if the plans are terminated
Disability & Health Insurance Claims
The Department of Labor provides extensive health insurance guidelines. Still, it isn’t always easy for workers to get information on their benefits and employer responsibilities. Still another set of pages describes claims procedures, to whom they apply, what is covered, the relationship between ERISA requests for benefits and Medicare, and many more aspects of ERISA coverage.
The ERISA website explains patient benefits and employer obligations. The Compliance Assistance section is to help employers and employee benefit plan practitioners comply with ERISA requirements when administering employee retirement and welfare benefit plans. The Consumer Information on Health Plans has additional information from the Department’s Employee Benefits Security Administration.
If you applied for payment for disability and your claim was denied, you may still believe you are entitled to benefits. Trying to slog through the government’s explanations of eligibility, timelines, and other details about your ERISA benefits may prove to be frustrating. It is for many people.
If you believe your claim was wrongly denied, you should speak with an ERISA lawyer who can help guide you through the process. Trying to be your own advocate in an ERISA case is nearly impossible, because of the complexity of the rules and regulations.
ERISA can greatly impact trusts and other estate planning instruments. When it comes to compliance, document drafting, and administration, make sure you get help from someone who is highly skilled at drafting trust and estate documents and understands how ERISA can impact these.
Have you utilized any ERISA policies? How did it go?
Share your experience in the comments.