Former participant requests SPD and 5500

[Guest jms370]

Does a former plan participant have the same right to view the SPD and 5500 as a current participant? This person has taken a total distribution and is out of the plan.

[Guest dmj1998]

i'm not a lawyer (thank god ) - but if they are asking for these documents that apply to the last year in which they were a participant, i would think you have to provide it.

in terms of common sense, why would you not provide it? its not like someone off the street is asking for it. hopefully, there is nothing in there that a plan sponsor would be ashamed of...

[Guest jms370]

We just went through a conversion, so the new SPD isn't yet available. There aren't any problems with the SPD for the former plan, but it's the first time we've had anyone request the 5500 as well so it gave me pause. This person is disgruntled about our plan conversion and the fund mapping, although it was all done prudently and we upheld every fiduciary responsibility. Thanks for your response.

[mbozek]

Under the Dol regs only participants and beneficaries have a right to receive/request an SPD. Generally former participants who have cashed out their benefits are not participants and have no rights under ERISA. However a former participant who has cashed out benefits would be entitlted to an SPD and other plan documents, 5500s, etc if that person has a colorable claim to benefits under the plan. PS this is why u need a lawyer-- non lawyers cannot properly evaluate the plan administrator's duties. Disgruntled former employees like to harass the plan admin. General Rule is give them what they ask for because they will not understand what u give them. Give them the old spd because that is what is available.

[RCK]

It seems to me that jms370 has three alternatives:

1. Respond that as a former participant, they are no longer entitled to receive those documents. On advice of counsel, this is what we did last time we got a request like this.

2. Tell them they are not entitled to either document, but that you are sending just an SPD because you are such a nice person.

3. Send them an SPD, and tell them that if they want a copy of the plan document then they will have to pay the copying charge in advance. If your SAR then says that the copying fee is $0.25 per page, and your plan document is 150 pages, then they will probably go away.

RCK

[Guest dmj1998]

jms370 - i'm sorry if it appeared that i was accusing you of having some skeletons in your benefits closet - sometimes typing isn't the same as speaking. since your request is in the light of a recent plan conversion, there will always be 'doubting thomases" no matter how well the conversion is executed. your right about someone asking for 5500's being a rare request - which would lead me to believe that the participant may have sought legal advice in advance of asking you for the documents. this could have been from a real lawyer or an armchair legal "expert" like myself.

while mbozek is right about you seeking legal counsel yourself, i would put forth that the dynamic at work there is not always about identifying the plan administrator's duties, but also about mitigating risk. not giving the documents creates an adverserial relationship and can set you up for an enjoyable stream of letters from the participant's lawyer since that lawyer probably has a different opinion about the plan administrator's duties than your lawyer might. giving the documents at the very least belays the formal legal inquiries, and may even dissolve the issue through information overload to the former participant.

[MGB]

Note that if you do give them 5500s, not all of the schedules are public information and should not be copied, particularly any that include individual information (such as the SSA).

[pjkoehler]

jms370: The Supreme Court addressed this issue in Firestone Tire & Rubber v. Bruck, 489 US 101 (1989). The term "participant" for purposes of determining the persons entitled to information and documents under ERISA disclosure requirements is not limited to the meaning ascribed to the term "participant" on the records of the plan administrator, but is more expansive and includes any person with a "colorable claim" for benefits, i.e. a mere good faith belief whether or not he is ultimately correct. The information requested by this former employee is within the scope of the information ERISA Sec. 104(B)(4) requires to be made available to a "participant" upon written request. Failure to provide the information to a "participant" subjects the plan administrator to a penalty of up to $100 per day for each day it is late. ERISA Sec. 502©(1).

Look at it this way, whether or not the distribution that the employee you've mentioned received was "total" under the plan is potentially an issue that a court/arbitrator may have to decide, i.e. was the participant entitled to additional benefits? From a litigation-avoidance strategy point of view it makes much more sense to give the former employee this information. First, of all, the failure to do so potentially creates a cause of action against the employer (in addition to the underlying claims of wrongful denial of benefits and breach of fiduciary duty for failure to provide access to the plan's claims procedure). This, of course, is likely to increase the settlement value of the case. (Employer's who play hardball over this information unnecessarily tends to get the interest of plaintiffs' lawyers - as in "what are they hiding?") Second, if the employer's determination is based on unambiguous plan terms, then giving the former employee this information is likely to persuade him that his claim is not meritorious and he'll go away or at least his quest for a contingency fee lawyer to take his case will be unsuccessful. That's a good cost-benefit relatioship. Third, not giving him this information and forcing him to litigate to get it in order just to be able to determine whether he has a colorable claim creates a negative impression of the defendant-plan administrator's fiduciary instincts to the court. Many courts take the view that plan administrators who do that got trapped in an employer-former employee paradigm rather than the appropriate fiduciary-participant paradigm. Judges with busy dockets have a tendency to lose patience with parties that force former employees to litigate issues like this.