Definition of Employee Retirement Income Security Act of 1974 (ERISA)
Employee Retirement Income Security Act of 1974 (ERISA) is the legislation that governs the operation of private sector pension plans. Corporate pension plans organized under ERISA guidelines qualify for beneficial tax treatment by the IRS.
Applying "Employee Retirement Income Security Act of 1974 (ERISA)" to Securities Exams:
Passed in 1974, ERISA standardizes business practices for corporate pension plans. ERISA states: the plan must be available to all eligible employees, and that the rules for eligibility are the same for all employees; the plan must be funded the same way for all eligible employees; all eligible employees have the right to name their own beneficiaries; all eligible employees are vested in the same way; communication must be made to the employees regarding the plan, at inception, and annual updates must be made; and the corporation has a fiduciary responsibility to the employees.