Interest payable on pension payments

[Guest ooota]

The pension plan has an individual who was eligible to retire on September 1, 2004; however, the individual just applied for his pension benefits. Is the individual eligible for interest on the pension payments he would have received, if he had applied to receive his pension in 2004?

The plan did not provide the individual with a notice indicating that if the individual does not start benefits at normal retirement, the individual may lose benefits. It is my understanding that if this notice had been provided to the individual, the plan would not have to retroactively provide benefits, if the benefits are applied at a later date. In that the plan did not provide such a notice, the individual has the right to retroactively start benefits. If the individual retroactively starts benefits is the individual is entitled to interest on late payments?

Thank you in advance for your help.

[Effen]

If the Plan does not allow retro-active payments than you can't pay them. If they can pay them, you need to be careful about spousal consent, ect... The IRS has some fairly new Regs on this issue, but it’s fair to say, they don't like to see them.

If the plan didn't give the participant a suspension notice, your only real option is to actuarially increase the benefit to reflect the value of the missed payments. Otherwise, I believe you have effectively reduced his accrued benefit which is a 411(d)(6) violation.

You should run this past the plan's attorney since they will need to defend the decision if the participant appeals.