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Employee Retirement Income Security Act of 1974: Difference between revisions
Employee Retirement Income Security Act of 1974 (view source)
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The [[Employee Retirement Income Security Act]] of 1974 ([[ERISA]]) (Pub.L. 93–406, 88 Stat. 829, enacted September 2, 1974, codified in part at 29 U.S.C. ch. 18) is a United States federal law which establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. [[ERISA]] was enacted to protect the interests of employee benefit plan participants and their beneficiaries by: | The [[Employee Retirement Income Security Act]] of 1974 ([[ERISA]]) (Pub.L. 93–406, 88 Stat. 829, enacted September 2, 1974, codified in part at 29 U.S.C. ch. 18) is a United States federal law which establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans. [[ERISA]] was enacted to protect the interests of employee benefit plan participants and their beneficiaries by: | ||
Requiring the disclosure of financial and other information concerning the plan to beneficiaries; | *Requiring the disclosure of financial and other information concerning the plan to beneficiaries; | ||
*Establishing standards of conduct for plan fiduciaries; | *Establishing standards of conduct for plan fiduciaries; | ||
*Providing for appropriate remedies and access to the federal courts. | *Providing for appropriate remedies and access to the federal courts. | ||
*ERISA is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the [[Internal Revenue Code]] and [[ERISA]] itself. | *ERISA is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the [[Internal Revenue Code]] and [[ERISA]] itself. | ||
===Investment | ===Investment vehicles=== | ||
'' | ''Be extra-specially warned: this is the untutored ramblings of a non-US lawyer'' | ||
If there is more than a certain percentage of ERISA plan money (or money from other non-ERISA Government retirement plans with similar legislation) in | ===Close out and netting=== | ||
If there is more than a certain percentage of {{tag|ERISA}} plan money (or money from other non-{{tag|ERISA}} Government retirement plans with similar legislation) in a fund, it becomes itself subject to {{tag|ERISA}} regulations, particularly penal tax and investor protection provisions, ''and also provisions affecting the ordinary winding up of the fund and therefore netting''. | |||
While some people will loosely talk of a "look-through" to the underlying fund it doesn’t seem right that you would look through the close out netting of a separate Fund legal entity to view the insolvency scenario of an underlying ERISA investor – particularly since the underlying investor will be no means necessarily itself be insolvent, just because a legally distinct fund it had invested in had blown up. | While some people will loosely talk of a "look-through" to the underlying fund it doesn’t seem right that you would look through the close out netting of a separate {{tag|Fund}} legal entity to view the insolvency scenario of an underlying {{tag|ERISA}} investor – particularly since the underlying investor will be no means necessarily itself be insolvent, just because a legally distinct fund it had invested in had blown up. | ||
It seems more likely that by dint of its ERISA investment, the sleeve fund itself would be deemed subject to ERISA and therefore ERISA might intervene in the Fund's insolvency | It seems more likely that by dint of its {{tag|ERISA}} investment, the sleeve fund itself would be deemed subject to ERISA and therefore ERISA might intervene in the Fund's insolvency. | ||
In any case in the UK the netting analysis depends on the good old fashioned corporate veil: Unless there is a reason (fraud etc.) to lift the veil and treat the proximate corporate entity (the Fund) as a sham, the corporate veil will not be lifted under English law: the fact that there is just one investor in the company is very clearly no reason to lift the veil in itself (else the majority of all corporate veils would be lifted). (I would have said exactly the same would apply in the US – but as per above happy to stand corrected) | In any case in the UK the netting analysis depends on the good old fashioned corporate veil: Unless there is a reason (fraud etc.) to lift the veil and treat the proximate corporate entity (the Fund) as a sham, the corporate veil will not be lifted under English law: the fact that there is just one investor in the company is very clearly no reason to lift the veil in itself (else the majority of all corporate veils would be lifted). (I would have said exactly the same would apply in the US – but as per above happy to stand corrected) | ||