How Do I Know If My 401(k) is ERISA Qualified?
If you are filing bankruptcy and have a 401(k), your attorney will most likely ask you to provide proof that your 401(k) is ERISA qualified. An ERISA qualified 401(k) is exempted or protected in bankruptcy. Okay, you are asking yourself, what is ERISA qualified and where do I go to find it if my 401(k) is qualified?
First, ERISA is an acronym for Employee Retirement Income Security Act. ERISA is a federal law setting the minimum protection standards for individuals contributing to pension and some health plans established by private companies. ERISA does not apply to federal and state employees, since they are usually government retirement plans. ERISA requires the private employer to provide information to you about the features of the plan, how it is funded, specific fiduciary responsibilities for management of the plan, etc. For our purposes, we are specifically looking at retirement or 401(k) plans.
Most retirements plans meet the ERISA requirement. Often your employer has a letter on file from the Internal Revenue Service that they will provide to you. This letter states your company’s retirement plan has been reviewed and meets the minimum requirements under ERISA. If you are unable to obtain the letter directly from your employer, you may contact the 401(k) administrator and ask them to provide you a copy of the plan summary. You may even have access to your plan summary online. In the table of contents, there may be a section that speaks about ERISA. If not, quickly review your plan document and look for the word ERISA. It may not specifically say your plan has been reviewed by the Internal Revenue Service and meets the ERISA requirements, but it will usually indicate the plan complies with ERISA reporting requirements.
Again, most employer sponsored 401(k) plans meet the requirements under ERISA. However, it is something you want to verify prior to filing bankruptcy. Often the bankruptcy Trustee will ask for a copy of your most recent 401(k) statement and a notice of ERISA qualification prior to or at your meeting of creditors. If you should have any questions about your plan, speak with the administrator of your 401(k).
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