Glossary
ERISA
ERISA (the Employee Retirement Income Security Act of 1974) is the federal law that sets minimum standards for most private-sector retirement and health plans, including fiduciary duties, vesting rules, and disclosure requirements.
ERISA requires that plans be run solely in participants' interests, that plan assets be held in trust separate from the employer, and that participants receive plan documents and fee disclosures. It generally does not cover government plans (like CalPERS), church plans, or IRAs.
Why it matters in practice
For employees, ERISA is why 401(k) money is protected from the employer's creditors and why fee disclosures exist. For business owners, sponsoring a plan makes them ERISA fiduciaries personally — liable for imprudent fund menus or excessive fees — which is why many hire outside fiduciaries (3(21) advisers or 3(38) managers) to take on part of that responsibility formally.
Related terms: Fiduciary · Plan Sponsor · Qualified Plan · Vesting · 401(k)