An interested party is an individual or entity that benefits from the outcome of legal action or is associated with a retirement plan. They are afforded certain rights and protections under the law while being restricted from transacting with other parties involved in the action. The Employee Retirement Income Security Act defines and identifies a party interest in connection with various retirement plans.
In the broadest application, an interested party is an individual or other entity that will benefit from the outcome of some type of legal action, such as a bankruptcy or lawsuit. The term is also used to identify the person associated with a retirement plan who is prohibited by government regulations from conducting specific types of transactions that are related to that plan. In both applications, the idea is to protect the interests of all parties involved, without any party having the ability to take advantage of others involved in the lawsuit or plan.
In terms of legal situations, an interested party would be both the defendant and the plaintiff in the case, along with any service providers that may have a business relationship with the two parties. Depending on the exact situation, the interested party is afforded certain rights or protections under the law, as well as being somewhat restricted from transacting with other parties involved in the action. For example, at a bankruptcy hearing, a creditor will be awarded a part in interest status and will have the ability to present facts that will be considered before the court, effectively protecting that creditor’s interests.
With respect to the ongoing operation of an employee retirement plan, the employer, including the company’s directors and officers, are considered interested parties. In addition, the trustee of the plan, employees enrolled in the plan, and any organization of employees where all or part of the membership is enrolled in the plan, shall also be considered interested parties. Lawyers who have an ongoing business relationship with the employer are also sometimes considered parties of interest.
In the United States, the Employee Retirement Income Security Act, known as ERISA, provides the basis for defining and identifying a party interest in connection with various retirement plans. Any individual or entity that identifies itself as an interested party under the terms of ERISA has certain rights associated with the plan, but is also prohibited from taking specific actions with respect to the plan. Along with the employer and employees, a party interest can be any investor who owns more than fifty percent of the employer’s organization. Depending on the structure of the plan and the individual’s relationship with an employee organization, the spouse, children, or spouse of a child of the employee may also be considered an interested party.
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