The Employee Retirement Income Security Act of 1974 (ERISA) is the primary federal law that governs how retirement accounts and health plans are supposed to be run. While this may sound relatively mundane, the fact of the matter is that ERISA violations can result in serious harm to workers and retirees that rely (or intend to rely) on their retirement accounts later in life. But what exactly is ERISA, and how might it impact you?
What is ERISA?
ERISA is the primary law that sets rules for running many types of retirement accounts and health plans, including setting rules for how they can be run and what responsibilities they have to their beneficiaries. Among other things, ERISA requirements for the disclosure of information to beneficiaries about their plans, and impose a legal duty on those who run the plans to act in the best interests of plan participants. It also grants participants the right to sue in cases where breaches of the law result in harm to them.
What Does ERISA Require?
The requirements imposed by ERISA are numerous, but there are a few that are most important to highlight for average people. For example, plan owners have a fiduciary duty to act in the best interests of beneficiaries, meaning they can be held legally liable if they advise participants to act in a way that benefits them personally or if they fail to advise participants of known risks. ERISA plans must also maintain minimum capitalization levels to avoid issues with potentially running out of money.
How Might Someone Violate ERISA?
There are many ways someone might violate ERISA. These may include, but are not limited to:
- Failing to disclose important information about retirement or health accounts
- Failing to operate the account in a responsible fashion
- Taking assets out of participant accounts for their own personal benefit
- Failing to properly value plan assets
- Failing to hold plan assets in trust
- Violating the terms as laid out in the retirement or health plan
- Illegally disclosing sensitive information about participants (as per HIPAA)
What Are The Possible Consequences of ERISA Violations?
When people violate ERISA, it can result in significant harm to the people who pay into these retirement accounts or health plans. They may find it difficult to obtain the benefits they’ve paid for, resulting in them losing money from their accounts or paying out of pocket for something the plan should have covered. In the most extreme circumstances, these plans could collapse entirely, leaving participants with no means to cover their expenses. That is why it is essential to hold violators responsible for their breaches of ERISA.
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