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What is ERISA and how does it protect my retirement plan?

Some of our more frequent readers may have heard us reference ERISA, or the Employee Retirement Income Security Act. But while we have talked about it in past posts, some of our readers might still be confused about what ERISA is and what it does for your retirement plan. That's why we wanted to focus this week's post on these very questions and hopefully give people here in Texas the information they need to make sure their employer is not taking advantage of their retirement fund.

According to the Department of Labor, ERISA is a "federal law that sets minimum standards for pension plans in private industry." This means that if an employer were to establish a retirement plan -- be it a pension, 401k or similar savings plan -- the money you put in to such a fund is not only governed by the standards passed down by the government but is also protected from misuse or mismanagement as well.

Although most retirement plans are established with the intent to continuously run, it’s important to point out that an employer can terminate a retirement plan. But while some people might think that their vested money goes away when a plan is terminated, ERISA makes sure this doesn’t happen. In the event that an employer tries to violate the law though, ERISA does give participants the right to file civil claims against their employer for their vested benefits. Taking such legal action though without assistance from a skilled attorney is ill advised and could end poorly, especially considering how complex employment law can get in some states, including here in Texas.

Although we weren’t able to cover all of the things that ERISA does for your retirement plan, we hope that these basics will give our readers a better understanding of their employment rights so that if they find that their employer has violated these rights, then they know what their next course of action should be.

Source: The United States Department of Labor, “Frequently Asked Questions about Pension Plans and ERISA,” Accessed Jan. 24, 2014

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