The Employee Retirement Income Security Act of 1974(ERISA) is a federal statue, it established nominal standards for pension plans in private industries. It facilitates the individuals who take part in employee benefit plans. The plan requires pension plan’s financial information and other information regarding the plan. The ERISA provides all the rules and regulations regarding the federal income tax effects on transactions related to employee benefit plans.
The Employee Retirement Income Security Act was passed by the Congress in an attempt to eradicate inequalities in pension plans. The interpretation of ERISA is undertaken by the Department Of labour, the Department of Treasury and the Pension Benefit Guaranty Corporation. Whenever an individual feels cheated in regards to their employee benefit plan and wants to site the Employee Retirement Income Security Act, it becomes extremely difficult to comprehend who they should be reporting to.
The ERISA originated during the Kennedy administration. The support for a pension plan reform act was generated by the case of the automobile manufacturer, Studebaker Corporation, whose retirement plans were so poorly funded that the company failed in providing pensions to many of their employees. Finally, an NBC broadcast showcased the issues surrounding pension plans and the public anger reached an all time high. In the following years, the Congress held several public hearings on the concerned subject and eventually came out with the Employee Retirement Income Security Act in 1974.
It is essential to comprehend that the ERISA did not require employers to provide monetary minimum for benefits or establish pension plans. Thanks to the Congress, millions of Americans have benefited from ERISA since its inception. The employees can be carefree because they are aware about the fact that their pension plans will be waiting for them, once they reach retirement age.