What is the relationship between fica, erisa, and social security?

Running Head: LEGAL ENVIRONMENT 1

LEGAL ENVIRONMENT 4

Legal Environment

Cassandra Dunn

Colorado Technical University

Legal Environment

What role does Social Security play in employee retirement?

Simply defined social security is a system supported by the government that offers monetary assistance to low or no income individuals. In the United State, the social security provides the retiree, the disabled people and the unemployed with benefits in monetary form. Social security plays a crucial role in ensuring that once an active contributor retires he or she gets at least 40% of his previous salary. Also, social security will ensure that once an individual retires his or her future is secured. As a retirement plan, the benefits that accrue are calculated on the amount of contribution one has made throughout his or her working life (Gruber, 2007).

The level of benefits offered by social security and the manner it interacts with key retirement plans and pensions plus the overall income could trip up a retiree if he or she is not prepared. By the time of retirement, it might be too late to address these issues. What one gets is based on average indexed monthly earning and the key formulae for this largely relies on three factors the number of years an individual has worked on a job that is under the cover of social security; the salary paid per job; and the wages index versus nation average over that period.

What is the relationship between FICA, ERISA, and Social Security?

ERISA stands for Employee Retirement Income Security Act, which was passed into law in 1974. The act offers divorced spouses and spouses the right to be paid some pension plan. The relation of this act the Employee Retirement Income Security Act and Social Security is that the divorced spouse is entitled to the benefits. However, in Social Security, the couples ought to have been married for at least ten years, be 62 years and above and be currently not married.

Federal Insurance Contributions Act (FICA) is related to Social Security and in that the government makes it mandatory coverage for all employees working for the federal government or local government. Such employees are entered into the public retirement system as the social security coverage alternative. As far as Employee Retirement income security act is concerned the Federal Insurance Contributions Act in not a qualified plan. Actually is a form of tax that is contributed mandatory by both the employee and employer.

What are some real world examples of retirement planning programs?

Optional retirement program, in particular, the “University of North Carolina Retirement program is one of the real-life retirement programs. It is optional, and members are engaged in controlling their investment, control their retirement goals and the control over distribution.

Supplemental Retirement program is another form of retirement programs that cover the majority of the University employees as a supplement to the available retirement program the benefits include significant tax advantages.

What would be considered an example of fiduciary responsibility under ERISA?

An example of fiduciary responsibility includes protection of employee trust fund or protection for employee assets. Employee Retirement Income Security Act (ERISA) fiducially responsibility include offering an administering plan and assets management. ERISA writes down the expected standards to be followed by those managing the benefit plan for the employees

References

Gruber, J., Wise, D. A., & National Bureau of Economic Research. (2007). Social security programs and retirement around the world: Fiscal implications of reform. Chicago: University of Chicago Press.