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ERISA is a federal law. It regulates pension plan policies and requires that plans be made to periodically provide the participants with information regarding minimum standards for participation, vesting, benefit accrual and funding; and features and funding. It gives responsibility and permits participants to sue for violation of fiduciary duties. However, ERISA does not need an employer to have a pension plan and it does not enforce giving minimal benefits. Once the pension plan has been set up, it only regulates the operation of the plan. Provided below are answers to a few questions regarding ERISA: Q. If there is an ERISA fraud that has been committed, how can one report it and to whom?
The Department of Labor’s Pension and Welfare Benefits Administration (PWBA) is the body that is responsible for enforcing ERISA. Therefore, the ERISA fraud should be reported to PWBA. The PWBA in turn will refer the violations (civil and criminal) to the U.S. Attorney's offices. They will begin the prosecution proceedings. One may directly contact the regional offices of the Employee Benefits Security Administration, a division of PWBA. The Department of Labor website links to these offices. Q. A person’s ERISA funds were converted to IRA. This person passed away and the children of his ex-spouse were made beneficiaries. Is the wife not legally eligible to claim these funds?
In order for the beneficiary to be changed, permission of the spouse would be required in case it is a joint or survivor annuity ERISA account. One may come across a couple of scenarios based on the given situation:
Scenario 1 - if it was a joint or survivor annuity ERISA account and the departed husband did not alter the beneficiary designation; then it might be a possibility that the husband had not nominated the wife as the beneficiary initially and did not alter it afterwards.
Scenario 2 – IRA account is a trust account and the ERISA funds were converted to IRA. As per the Tennessee Code 45-2-704, the owner of a trust account can nominate anyone as the beneficiary to the account without a probate.
However, Tenn. Code 31-1-105 states that any transfer that intends to defeat a surviving spouse’s share of a deceased person’s estate can be held as void by a competent court. Therefore, if one is able to prove that the deceased husband wished to defeat one’s right to the property, it may assist in obtaining the money from the ex-spouse’s children. Q. Under ERISA, what are the sections that govern the set-up and control of self-insured health plans?
29 U.S.C. 1003 of ERISA governs the self-insured plans and these are not governed by the state laws. This section does not restrict the kinds of companies that are allowed to set-up self-insured plans. It is necessary that a Summary Plan Description (SPD) is maintained by the people who govern the employee benefit plan. As per the SPD; all rights, benefits and responsibilities of participants under the plan should be precisely described. It is required that a summary of changes is provided to the participants by the plan administrators in the event of any alterations to the plan or to the information available on the SPD. It is not necessary that the plan administrators file copies of these with the department, but are required to provide copies as and when requested by the department.
In addition, an annual report (Form 5500 Series; due on the last day of the seventh calendar month after the end of the plan year) must be filed every year with itemization of financial and other information that relates to the functioning of the plan. A synopsis of the annual report (the Summary Annual Report) must be given to the participants and the beneficiaries by the people who govern the plan. Q. Does medical disability impact the statute of limitations under ERISA?
Under ERISA, depending on the petition filed; the statute of limitations differs. For violation of fiduciary duty it is three years, and for actions alleging concealment or fraud, it is within six years of plaintiff’s discovery of violation. However, the period would be affected if the disability damaged the plaintiff’s knowledge of the breach or helps to allege fraud or concealment. It is best to verify with a local attorney to evaluate one’s situation and ascertain if the period can be postponed. One may contact an employment lawyer for any questions regarding one’s rights under ERISA.
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