Law Dictionary

Employee Benefits Security Administration

Agency EBSA
Updated on: 26 Jul 2017
  1. Labor Department agency charged with overseeing management of the nation's approximately 707,000 private retirement plans and approximately 5 million health and welfare plans. Under the Employment Retirement Income Security Act, administrators of private pension and welfare plans must provide plan participants with easily understandable summaries of plans; must file those summaries with the EBSA; must report annually on the financial operation of the plans; and must meet other fiduciary standards—all of which are overseen and enforced by EBSA. Vesting, participation, and funding standards are primarily enforced by the Internal Revenue Service. The independent Pension Benefit Guaranty Corporation (PBGC), a wholly owned government corporation, pays or owes benefits to 1.5 million current or future retirees under failed pension plans and administers two insurance programs that together protect 41 million workers in about 24,000 defined benefit pension plans.


Financial Definition of EMPLOYEE BENEFITS SECURITY ADMINISTRATION

Employee Benefits Security Administration

What It Is

The Employee Benefits Security Administration (EBSA) is the branch of the United States Department of Labor responsible for overseeing the administration and planning of employee pension funds by company investment managers.

How It Works

The United States Department of Labor ensures that the American workforce is treated fairly and is compensated in accordance with the law.

Since the introduction of employee savings plans in the early 1980s, plans such as the 401(k) and the 403(b) enable American workers to save a tax-exempt portion of their pay toward their retirement by way of a managed investment account. However, such plans have also opened up a new avenue for potential mismanagement and embezzlement of employee assets.

EBSA functions as the regulating body that ensures that embezzlement and mismanagement of assets does not take place. EBSA sets regulations concerning how plan funds may be invested and reported for taxation and compliance.

Employee assets under management, for example, must be periodically reported to EBSA to ensure compliance. Each company must submit all relevant information on employees' savings accounts to demonstrate that all transactions and withholdings are being administered according to EBSA regulations.

Why It Matters

Those who manage the assets associated with employee savings and retirement accounts typically manage many millions of dollars in assets and there is high potential for fraud. EBSA deters investment managers from engaging in such activity and ensures that employee assets are managed effectively.


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