On September 2, 2014, ERISA—the Employment Retirement Income Security Act—turned 40 years old. Implemented at a time when companies were able to go out of business and take their employee’s pensions with them, ERISA changed the face of retirement forever. Today, it continues to protect employees in many ways, including protecting some $7.5 trillion in assets for 141 million workers.
The impetus for ERISA began when Studebaker Corporation went bankrupt, and its poorly funded pension plan couldn’t pay what it owed to its employees. Despite legislative scrutiny, there was no finding of wrongdoing, because no laws existed to protect employee pensions. More than a decade (and many investigations, articles and documentaries later), ERISA was born.
Although ERISA’s initial goal was to avoid the Studebaker debacle from recurring, it regulates more than pension plans. In addition to establishing rules for pension plan structures, vesting and payouts, and providing a protective corporation that covers pension plan defaults, ERISA also regulates the operation of health benefit plans. (COBRA and HIPAA are part of ERISA.)
ERISA was also the impetus for the creation of the 401(k) plan structure, after employers began to phase out pension plans and shift fiduciary responsibility to employees in response to the new regulations. Statistics show that job applicants often give preference to companies with 401(k)’s and will work for less if they have this perk. So, thanks to ERISA, you can help your workers secure their futures and land high-quality employees, for less.
If you don’t currently offer a 401(k) plan, we urge you to put one into action, soon. Marathon HR offers a ready-made 401(k) program that is easy to implement and can be customized to your specific situation. After its inception, we handle the administrative burden for you.
Starting a 401(k)—even one that is preconfigured, like Marathon HR’s—requires advance planning. If you are interested in offering a 401(k) for 2015, you should call us in the next few weeks, at (678) 208-2802. If you would like advice or assistance with the requirements of other retirement instruments, such as pension plans, we can help there, too.