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Anti-alienation


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Only a PN (pension nerd) like me (or maybe also some others who frequent this board), while listening on the radio to the terms of Thursday's plea bargain agreed to by Detroit's Mayor, would be wondering about the legality of those provisions which assigned his future pension payments from his State of Michigan pension to the City (see Item 4 of: http://www.freep.com/uploads/pdfs/2008/09/0904pleadeal.pdf ). Then I realized that it's a governmental plan, by golly, and ERISA Section 206(d)(1) (see ERISA Section 4(b)(1)) and IRC Section 401(a)(13) (see flush language at end of 401(a)) do not apply.

My, my . . . ERISA is a living document after all . . . :blink: Ain't life grand!

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Only a PN (pension nerd) like me (or maybe also some others who frequent this board), while listening on the radio to the terms of Thursday's plea bargain agreed to by Detroit's Mayor, would be wondering about the legality of those provisions which assigned his future pension payments from his State of Michigan pension to the City (see Item 4 of: http://www.freep.com/uploads/pdfs/2008/09/0904pleadeal.pdf ). Then I realized that it's a governmental plan, by golly, and ERISA Section 206(d)(1) (see ERISA Section 4(b)(1)) and IRC Section 401(a)(13) (see flush language at end of 401(a)) do not apply.

My, my . . . ERISA is a living document after all . . . :blink: Ain't life grand!

Even ERISA allows a voluntary assignment of a pension once benefits begin.

Some states (NJ) now allow forfeiture of pensions by government officials who are convicted of corruption.

And federal law permits the seizure of pension distributions to pay fines, penalites and restitution imposed by a federal court regardless of the non alienation provisions in ERISA or state law.

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Many governmental plans provide that a participant forfeits a benefit if he or she committed an offense related to his or her conduct as a government officer or employee. (For citations to selected statutes and court decisions on this point, see my Q&A 12:84 in Governmental Plans Answer Book.)

Plea bargains operate in both directions. Sometimes, an accused admits offenses that don’t forfeit the pension and the prosecutor withdraws charges that would forfeit the pension. In other cases, an accused accepts a pension forfeiture to bargain for less imprisonment or other punishment.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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