Duty to Follow Plan Document

[Guest lvegas]

As inducement to leave employment, employer promised small number of employees certain benefit features under plan that plan document does not provide for. If employees leave employment b/c of such promise, can the plan make such benefit features available? Could the promise be considered a de facto amendment available only to those employees induced to leave employment?

[JanetM]

You may stretch it - if the promise is in writing that the plan will pay these benefits. But I don't think a promise to pay or change the plan is any good unless in writing.

You will get into BRF trouble if you promise these benefits under the plan only for this group and no one else. What if one of the unintended decide to leave? If this is plan amendment the same benefits are available to all at the time.

[david rigby]

Just some thoughts:

Can the sponsor hold it's board meeting in the bathtub?

Are HCE's impacted by the "certain benefit features"?

Certainly the attorney or the consultant advised the sponsor that this "promise" requires a plan amendment? in advance?

[Guest lvegas]

1. Yes, but only in champagne glass whirlpools.

2. Not sure.

3. I don't think the decision was made w/ benefit of such advice.

So, if plan does provide feature only to some, specifically what would the worst case result be? DQ? Fiduciary breach?

Alternatively, if the plan does not make feature available (i.e., plan follows plan document), what if any recourse would affected participants have?

[JanetM]

DQ - maybe

If ER gave EEs the promise in writing they can sue. If oral they don't have much chance of case under ERISA. Why not just come up with specialized severence agreements to keep it legal without changing the plan?

[Guest lvegas]

COuld plan be amended retroactively to provide BRF only to those affected (i.e., the ee's induced to leave)?

[david rigby]

If no HCE's in the affected group, probably no concern for BRF; just amend the plan.