offset of participant's benefit
Posted 14 December 2000 - 09:45 AM
Posted 15 December 2000 - 02:44 PM
Posted 15 December 2000 - 04:17 PM
Also, a number of multiemployer plan trust agreements (as well as collective bargaining agreements) are being written so that delinquent contributions become plan assets as soon as they are "due and owing". Obviously, for employee contributions DOL already takes the position that these are Plan assets after, at the latest, the 15th business day following the month that the employee would otherwise receive those amounts. Some plans are therefore suing delinquent corporate owners, personally, as fiduciaries for failure to remit plan assets.
I believe that Congress specifcially amended 401(a)(13) to allow offset in the case of a judgment for fiduciary breach.
That said, someone could argue that the amendment to 401(a)(13) is specific so that Congress meant to disallow an offset for anything other than a judgment for fiduciary breach (such as a failure to make contribuitons pursuant to ERISA Section 515).
Finally, unless the Plan used the fiduciary theory, I assume the employer was unincorporated and that is why the Plan was able to obtain a personal judgment. I am not sure your owner would even be entitled to benefits from a multiemployer plan based on periods of service where he was unincorproated because of Section 302©(5) of Taft-Hartley 29 U.S.C 186©(5). DOL issued an opinion letter on this several years ago but only adressed the ERISA aspects and specifically refused to reach the Taft-Hartley issue.
Posted 16 December 2000 - 02:36 PM
I don't think that the exception provided in 401(a)(13)© (which references violations of Part 4 of subtitle B of title I) will work in your case. That only applies to breaches of fiduciary duty and your contributing employer is not a fiduciary to the plan. In addition, failing to make contributions is a violation of ERISA section 515, which is not part of part 4, it is part of part 5.
One suggestion would be to check ou the garnishement laws of your state, and have the sheriff show up every time a pension check is delivered.
Posted 17 December 2000 - 03:38 PM
I agree that the statutory 401(a)(13) theory probably would not work unless you had a judgment for fiduciary breach. However, as I noted in my prior post, a number of multiemployer funds are using fiduciary breach theories to impose personal liability for failure to make contributions to the plan. A number of the cases hinge on a Trust or a collective bargaining agreement containing language that make "due and owing" contributions plan assets (and therefore whoever controls those plan assets a fiduciary) but I think there was a case out of a California District Court in the last year that did not even require such langauge to hold that a corporate officer breached his fiduciary duty by failing to make contributions to a multi.
Finally, I know some large multiemployer funds now "require" direct deposit of pension checks. If that is the case, the Plan could simply garnish the bank account every time after payment. Of course I am not sure that this requirement of direct deposit has ever been tested.
Posted 18 December 2000 - 10:08 AM