Slideshow 11 ERISA Milestones

Published
  • September 08 2014, 10:19am EDT

Happy birthday ERISA! The Employee Retirement Income Security Act of 1974 turns 40 on September 2. Here’s a look at 11 important milestones, modifications and case law in the legislation’s 40-year history.

On Sept. 2, 1974, President Gerald R. Ford signed the Employee Retirement Income Security Act into law. In a statement on Labor Day that year, he surmised that the landmark measure could “finally give the American worker solid protection in his pension plan.”

[Image: Pension Benefit Guaranty Corporation]

2. PBGC is established

The administration of ERISA falls under the U.S. Department of Labor, the Internal Revenue Service and the Pension Benefit Guaranty Corporation. Currently, the PBGC protects the retirement incomes for more than 44 million American workers.
“ERISA set forth a framework that certain retirement benefits and other benefits couldn’t be subject to alienation,” says Matthew Whitehorn, a partner and chair of Dilworth Paxson’s employee benefits group. “It protected employees from the possibilities of losing their benefits and protects pension benefits from things like bankruptcy.”

[Image: Pension Benefit Guaranty Corporation]

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3. EBSA oversight

The Employee Benefits Security Administration, which has held prior names such as the Pension and Welfare Benefits Administration and the Pension and Welfare Benefits Program, is charged with “administering and enforcing” requirements of Title I under ERISA. Phyllis C. Borzi (pictured) has served as assistant secretary of labor of EBSA since July 2009.

[Image: Department of Labor]

4. The Retirement Equity Act of 1984

This modification to ERISA helped to reduce the maximum age an employer may require for participation in a retirement plan, extended the period a participant could be absent from work without losing credit, and created spousal rights for retirement benefits.

[Image: Fotolia]

5. The Omnibus Budget Reconciliation Act of 1986

This legislation added provisions that allow the Secretary of Labor to asses a civil penalty –which can reach about 20% of any amount recovered – for fiduciary violations.

[Image: Fotolia]

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6. The Omnibus Budget Reconciliation Act of 1989

This legislation added provisions that allow the Secretary of Labor to asses a civil penalty –which can reach about 20% of any amount recovered – for fiduciary violations.

[Image: Fotolia]

7. The Pension Protection Act of 2006

The PPA changed ERISA by expanding fiduciary investment advice options to participants in 401(k) plans and individual retirement accounts. It also increased transparency with new notice requirements.

[Image: Fotolia]

8. <i>Patterson v. Shumate</i>

Heard in 1992 by the Supreme Court, the ruling decided that even if a participant files for bankruptcy, creditors are unable to touch the person’s retirement account assets under ERISA’s anti-alienation tax qualifications.

[Image: Fotolia]

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11 ERISA Milestones

In 1987, the Supreme Court ruled that severance plans are not subject to ERISA requirements because they are not considered a plan and do not require ongoing administrative oversight from employers.

[Image: Fotolia]

10. <i>Fifth Third Bancorp v. Dudenhoeffer</i>

In 2014, the nation’s highest court determined that there is no presumption of prudence for the retirement plan industry’s fiduciary standard in employee stock ownership plans.

11. <i>Tussey v. ABB, Inc. </i>

Dealing with fees, the courts are currently deliberating over whether Fidelity breached its fiduciary duty when it floated income to ABB, Inc. retirement plans. A prior ruling that said the income was not a plan asset is currently under appeal.

[Image: Fotolia]