Understanding ERISA Laws Complicated to Understand

Boise, IDFor most people who have an ERISA plan, such as an employee savings plan or an employee stock plan, understanding the rules governing those plans might not be top priority. ERISA (Employee Retirement Income Security Act) benefits rules can be complicated to understand, and most employees assume that the people overseeing those plans are well versed in the rules, and will act in their plan participants' best interests.

The good news is that for the most part, plan fiduciaries will do what is best for the employees and will follow the rules. But there are some situations in which the fiduciaries breach their duty—in any of a number of ways—and employees and other plan participants lose out.

Employees and plan participants cannot be expected to know all the ins and outs governing their ERISA plans. The laws are just too complex and varied for everyone to understand them. What they need to know, however, is that fiduciaries—the people who run and manage the plans—have certain obligations to plan participants. Some of these involve duties to provide participants to provide plans with reasonable fees.

Lawsuits have been filed against companies and their fiduciaries, alleging ERISA plans had prohibitively high fees, which ate into the plan's assets. Costs associated with ERISA plans can have a massive effect on a plan's assets, decreasing the value over the life of the plan by hundreds of thousands of dollars.

Furthermore, when ERISA plans are invested in company stock, it is up to the fiduciary to ensure that decisions regarding the plan are made in the best interests of the plan and not of the company. This means pulling the plan out of company stock if the stock is no longer a feasible investment.

Employees count on plan fiduciaries and managers to prudently oversee the plan's assets, ensuring that when employees need the money in their benefits plans, it will be available for them. For the most part, plan fiduciaries properly manage their ERISA plans. When they fail to do so—when they breach their fiduciary duty—employees can file an ERISA lawsuit to attempt to recover their missing funds.