Employee Retirement Income Security Act (ERISA)
What Is the Employee Retirement Income Security Act (ERISA)?
Employee Retirement Income Security Act (ERISA) is a U.S. federal law that establishes standards and protections for employer-sponsored retirement and benefit plans.
ERISA was enacted in 1974 to protect employees who participate in workplace retirement plans and other employee benefit programs.
The law sets rules for how employers must manage and administer benefit plans such as:
- 401(k) plans
- Pension plans
- Profit-sharing plans
- Certain employer-sponsored health benefits
ERISA requires plan administrators to act in the best interests of participants and beneficiaries.
Why It Matters
Employee Retirement Income Security Act protects workers’ retirement savings and benefits.
Before ERISA, there were limited federal protections for employees relying on employer-managed retirement plans.
ERISA helps ensure that:
- Retirement plans are managed responsibly
- Participants receive accurate information about benefits
- Plan assets are protected from misuse or mismanagement
The law also establishes rights for employees to access information about their plans.
How Employee Retirement Income Security Act (ERISA) Works
Employee Retirement Income Security Act sets minimum standards for retirement and benefit plan administration.
Example: An employer offering a 401(k) plan must provide employees with clear information about plan features, fees, and investment options.
Plan managers must also follow fiduciary responsibilities, meaning they must manage the plan solely in the interest of participants.
The law requires regular reporting, disclosure requirements, and oversight to ensure compliance.
ERISA vs Social Security
ERISA → Governs employer-sponsored retirement plans
Social Security → Government retirement program funded through payroll taxes
ERISA does not apply to government retirement systems such as Social Security.
Related Terms
