Multi-employer plans

[Guest sonny0]

Employer A with a DB plan sold subsidiary to Employer B in a stock sale. Employer B assumed A's plans with respect to employees of the subsiduiary that became employees of B.

B's DB plan allows for early retirement at 55 with a 25% reduction if vested.

A's plan evidently required employees to be employed on the day they reached 55 in order to qualify for early retirement with a 25% reduction. Otherwise normal retirement age is 65.

Employee worked 10 years with A and 14 years with B. At age of 54 years and 4 months, B eliminated his job, and terminated his employment.

At age 55 employee applies for early retirement from B. He is told that the A portion will be reduced by 65% from the age 65 amount because he was not employed on the date he reached 55. He is told there is no discretion with ERISA on this matter.

I hope I have provided suffiecient but not too many details.

I would appreciate comments.

[david rigby]

OK. I don't see anything amiss. However, always possible other facts could be relevant. For example, when B "assumed A's plans with respect to employees of the subsidiary" caution is needed with respect to terminology.

Was there a separate (stand-alone) plan for the subsidiary? alternatively, a spinoff from the A plan? If neither, was there a transfer of assets from A plan to B plan? If so, there is likely to be plan language (maybe even language in the buy-sell agreement) that guides.

The title of your posting also raises some questions about whether this might be a multi-employer situation, or a multiple-employer situation, or neither.

Others can probably contribute more questions.

[Guest sonny0]

Thanks. The subject title may be misleading. This is what I am calling the situation not a technical term. There are 2 employers and 2 plans involved.

I am the employee and it seems unfair that they can have that much impact on me by laying off so few months prior to my reaching 55. Company A by the way subsequently amended it plan to look like B's but it was after the date of the

purchase.

What happens if they teminate at 54 years 354 days ?

[Mike Preston]

There is an overriding section of ERISA that controls their actions in cases such as these. A pension plan has many circumstances where a participant, on one day, is not entitled to a benefit, but at a later date (maybe just one day later) is entitled to a larger benefit. The drafters of ERISA recognized that there exists the potential that an employer would look into its crystal ball and essentially say: "Gee, if X continues to work for us until (fill in the blank - maybe the next day, maybe the end of the year, maybe even further!) ________________, we will incur an expense that is greater than what we will incur if employment is terminated. Let's terminate X's employment now and save some money." Since that potential can't be eliminated, they provided X with ERISA Section 510. It is short, but I'll shorten even more by highlighting the words that are applicable to what you have described:

"It shall be unlawful for any person to discharge .......a participant ....for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan."

For you to qualify for the early retirement subsidy you would need to convince your employer (or have a court decide in your favor) that your employment was terminated in violation of ERISA Section 510.

As you might guess, this is an extremely sensitive subject to be talking about on a public bulletin board, because you might prejudice your ability to have your benefits restored if you put information into the public domain.

What you need to do is contact somebody who can help you decide what the best course of action is. You have many choices, some less expensive than others, some quicker than others.

You can contact the Department of Labor and see whether they might be willing to look into your facts. Inexpensive, but not one you or I can predict the timetable with respect to.

You can contact an ERISA attorney.

You can appeal the decision to deny your entitlement to the early retirement subsidy yourself to the Committee (probably the action the attorney would take first) yourself, but you have to decide, after consultation with an attorney would be best, whether even that action might take away some of your rights prematurely.

There may be other options you have that others will post.

Good luck.