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Retirement plans that are protected by federal legislation

The Employee Retirement Income Security Act (ERISA) is federal legislation that allows government officials to maintain oversight over different employee-administered welfare plans and benefits. Some of the programs that federal officials oversee include health insurance policies and pensions. ERISA only covers two types of retirement plans, including defined contribution and benefit ones.

Administrators of defined contribution plans, including 401(k)s, employee stock ownership, 403(b) and profit-sharing ones, generally don't promise employees any specified benefit amount when they retire. Employers may contribute a certain percentage to complement what an employee invests into such an account, though. Employers generally take pre-tax deductions from their employee's pay and invest those funds into the retirement account on their worker's behalf.

The reason that companies generally can't provide their employees with a final benefit amount is that it may vary depending on how all parties contribute and how much they make in investment costs, losses and gains.

Defined benefit plans are ones that promise employees a specific monthly benefit amount when they retire. The amount that a worker receives varies depending on a combination of service and salary. A retiree with this plan may receive a percentage of their average salary for the last few years that they worked for the same period that they worked for their employer once they retire. They may also receive a flat amount per month once they leave their role. The Pension Benefit Guaranty Corporation, a federal insurance provider, financially backs these plans.

ERISA protects a retiree's right to the funds contained in the retirement account. Cash-strapped employers may think that they can get by in releasing funds from your account. If you're having difficulty receiving payments or not getting what you'd expected to, then an ERISA benefits attorney here in Washington, D.C., can investigate your case.

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