As you may know, the Employee Retirement Income Security Act of 1974 (“ERISA”) is a federal law that establishes the minimum standards for private pension plans in the United States. To say that ERISA law is complicated is an understatement. And many retirement plan professionals make costly mistakes concerning ERISA’s requirements and prohibitions.
As an employee of a private company, you may not need to know the more complex nuances associated with ERISA. However, there are some things about the law that you should know. Primary among these is how your employer may diminish the value of your retirement plan by violating their obligations under ERISA.
Examples of employer ERISA retirement plan violations
If your employer engages in ERISA violations, you need to know about it to deal with your situation and get the retirement plan benefits you worked so hard to get. As stated above, ERISA is a complex law. ERISA violations include the following:
- Failure to operate your plan prudently and for your benefit (e.g., selecting retail class shares even though the plan would qualify for less expensive institutional shares of the same fund).
- Failure to value your plan assets accurately.
- Improper use of a plan, such as using them to benefit certain individuals (such as the plan administrator). This is referred to as a breach of the fiduciary duty of loyalty.
- Failure to comply with the terms of your plan.
- Failure to choose and monitor service providers (e.g., overpaying for recordkeeping)
- Retaliating against an employee for exercising their rights under ERISA (i.e., it is illegal for your employer to punish or harass you for filing an ERISA lawsuit).
Employers may also engage in other illegal actions with your retirement plan assets. For example, they may give in to temptation or financial desperation and embezzle some of your benefit plan’s assets.
Both corporate mismanagement of funds and illegal use of plan assets can compromise your retirement benefits. We encourage you to familiarize yourself with some of the provisions contained in ERISA. Doing so can provide you with the knowledge you need to detect and act on any improper or concerning activity with your retirement plan.