[nib]

hello friends,

The Employee Retirement Income Security Act (ERISA)

1) such plans are established, then ERISA prevents employers from unduly delaying an employee’s participation in such a plan.

2) For instance, employee rights to employer contributions to the plan must vest in no more than five years.

I am not understanding meaning of these 2 lines .

[nib]

repost
hello friends,

The Employee Retirement Income Security Act (ERISA)
1) such plans are established, then ERISA prevents employers from unduly delaying an employee's participation in such a plan.
2) For instance, employee rights to employer contributions to the plan must vest in no more than five years.

I am not understanding meaning of these 2 lines .

[Shovel]

ERISA was established to protect retirement plan participants.

So in #1, this is saying that if the employer provides a retirement plan, the employer cannot try to prevent or delay on a prolonged basis the employees from participating in the plan.

In #2, ERISA establishes vesting (ownership) requirements, so after a determined amount of time of being employed, the employee has the right to the amount the employer has contributed to the retirement plan. If the employee leaves the job before they are fully vested, then they lose all or part of it, but they always get to keep the portion they themselves contributed.

AUD 11/15 91
BEC 1/16 83
REG 2/16 79
FAR 7/16

[nib]

hello
shovel,
wow thanks , it is very helpful.It seem you have understood erisa very well.

please let me know what is the meaning of 5 yrs .

“””plan must vest in no more than five years. “””””

Is it employee has to work for 5 yrs to be eligible for right to receive erisa .?

[Missy]

Vesting means that the employee is entitled to not only their own contributions to the plan but their employers contributions as well. If a plan vests in 5 years, that means if you leave the employer in less than 5 years you may only take your own contributions and not your employers.

ERISA is a law, not something you receive. ERISA provides rules for retirement plans to protect the participants. ERISA says that the employer doesn't need to let an employee participate in a retirement plan immediately upon hire but has to make the time required to participate reasonable and has to give participants full ownership of the entire balance within 5 years or less.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

“Five years” is the minimum period that the employers have the “right” over the contributions they are setting aside for the employees' pension or health benefits. After that period, the employers have no right over the contribution. The fund becomes the employees'. Employers can no longer touch it.

Please note, it's just the minimum period required by ERISA. There are many other generous companies out there, like Hewlett Packard, the vest in period is only three years.

[nib]

shovel
mla11692
amor D

thnaks .you people are so good in explaining .

Now, i will always remember ERISA .

[Author]

Replies