In 1974, the federal government established the Employee Retirement Income Security Act of 1974 (ERISA) to protect employees' rights in their pension plans. Although that act has been slightly amended in the last 35 years, the basic requirements of ERISA remain intact. Among those, employers are required to disclose employee's pension plan financial information, provide access to their funds, and clearly state remedial procedures for federal courts.
Pension Plan Structures
In most cases, they are structured in the following way. An employee contributes a fraction of his or her income into a plan. The employer then matches part or all of the contribution. Under most rules, the employee may remove his or her fraction of the contribution at any time, as guaranteed by the vested rights clause under ERISA.
However, the employee may not remove the employer's contribution whenever he or she wants.
Instead, the employer typically picks one of two options for when a worker may remove the employer's fraction of the contribution:One, the employee may remove part or all of the employer's contribution after five year of non-consecutive employment.
Two, the employee may remove 20% of the contribution in the third year of employment, 40% in the fourth year of employment, 60% in the fifth year of employment, 80% in the sixth year in the fifth year of employment, and 100% in the seventh year of employment.
While these two structures are the most common, other structures do exist and understanding your structure is important for employees who wish to recover the full amount.
Pension Plan Regulations Under ERISA