1. Lecture 21 ERISA and Plan Qualification Requirements
Impetus for this legislation
Summary
Eligibility and Participation Requirements
Coverage Rules
Vesting
Retirement Age
Other Federal Regulations
Sex Discrimination
Age Discrimination

2. Employee Retirement Income Security Act - 1974
Impetus
Studebaker 1964
Employees received about 15% of promised benefits
Major provisions
Funding requirements
Pension regulations
Reporting
Pension Benefit Guarantee Corporation
Initially flat rate
Later based on funding level

3. Eligibility and Participation Requirements
Age and Service Requirements
Not more than one year of service
Not older than 21
Alternatives
Two year waiting with 100% vesting then
Entry dates
Educational institutions
Definition of year of service (1000 hours)
Breaks in service

4. Coverage Rules Coverage Tests Highly Compensated Employee
Ratio percentage test
% of non-HCE at least 70% of % of HCE
Average benefit test
Average benefit of non-HCE as % of compensation must be at least 70% of that for HCE
Highly Compensated Employee
Owner of more than 5% interest in employer
Compensation in excess of $80,000 (indexed)

5. Vesting Nonforfeitable right to accrued benefits
Plan must be at least as generous as one of the following:
Cliff vesting (100% vesting at 5 years)
Three to seven year vesting
20% at 3 years
40% at 4 years
60% at 5 years
80% at 6 years
100% at 7 years
Top-Heavy Rules
One year faster than 3-7 year vesting

6. Retirement Age Normal Early Late Full retirement benefit
Youngest age any benefit will be paid
Reduced amount
Early retirement windows
Late
Must avoid age discrimination

7. Other Federal Regulations
Sex discrimination
Civil Rights Act of 1964
Effect of differences in mortality
LA Department of Water and Power v. Manhart (1978)
Contributory plan
Arizona Governing Committee v. Norris (1983)
Annuity choices
Age discrimination