Changing Payment Election After Payments Commence

[Guest elem]

Is it ever possible to change a payment election after benefits commence?

In this case a participant was terminated and elected a form of payment on Dec. 17, 2004. The first payment was made Jan. 3rd or 4th of 2005. The amount of the payment was not what was expected, so they contacted the sponsor. The sponsor said that the payment was correct based on the form elected. They also indicated that the plan did not allow for a change of payment after benefits commence.

This participant is mentally disabled (they are receiving the benefit as a termination payout, not a disability benefit). The only reason I mention this is that I'm wondering if there might be something like the ADA that would override ERISA and/or the Plan Document, assuming that the participant did not understand the election form.

Also, an attorney helped this participant at the time of termination. Apparently, the participant was terminated a couple of months prior to qualifying for a significantly larger benefit. The plan sponsor agreed to change the termination date to allow for the larger benefit. At the time the attorney helped with the benefit amount, it was clarified in writing that the form of payment should not be the form that was eventually elected. The participant probably chose the form that had the largest amount (accelerated distribution for 4 years, and offset by SS after four years).

Thanks

[david rigby]

This is pretty muddy, but I'll venture an opinion (worth very little I have found).

IMHO, it is advisable to deal with this question thru the plan's appeal procedures. Best to do so in wrtining. Let the participant and/or representatvie submit documentation that may support the request/claim for a different form of payment. This permits the Plan Administrator the opportunity to review the facts, and (if available) any prior precedent.

Not to imply the PA has the ability to change the plan provisions, but it is the PA's job to interpret when ambiguities arise. Using the plan's appeal procedures also documents what was discussed, what facts were presented, and what reasoning was used to arrive at a conclusion.