If you are an employee of a corporation in the private sector, ERISA is likely to affect you. You may have heard the word before, and you might even know what it is and how it works. Many workers who are influenced by it every day, however, are also unaware of how it does so. McKennon Law Group PC-Insurance Claims Lawyer has some nice tips on this.
The Employee Retirement Income Protection Act of 1974 is short for ERISA. It is a piece of legislation that sets minimum requirements for company-run pension plans and specifies how compensation packages are impacted by the federal income tax. It was designed to provide a degree of retirement-plan security for workers and to control a sector that includes millions of Americans.
Plans for Pensions
Under ERISA, businesses are not legally obliged to provide their employees with pension plans. It also does not mandate a certain level of benefits to be offered by businesses. For businesses that do have such systems, however, the legislation sets such requirements.
For instance, a vesting choice for workers must be available. Their retirement package must mature after a certain number of years on the job. In addition, such minimum thresholds must be met by employers who wish to provide such services.
Employee vesting allows employees after a relatively short time of employment to take advantage of certain services. Usually, after three years, or after a graduated schedule of two-six years, one becomes completely vested.
As with pension plans, ERISA does not require that an organization offer health care benefits to its employees. However, if the organization chooses to establish one, it sets guidelines for running a health plan.