Distribution Delay?

[Guest Grumpy456]

A large 401(k) plan uses Fidelity's daily valuation platform. Participants can access their accounts through a Fidelity telephone number or their website. A participant who terminated in a prior year and is eligible for a distribution has been trying to "time the market" and take a distribution when his account balance is high. We made the decision to request a distribution on a particular date but was unable to do so because the plan sponsor's records did not initially show that he had a termination date. By the time things were sorted out, about two weeks later, the participant received his entire vested account balance (which, by then, was about $5,000 less than it had been two weeks earlier). You guessed it, the participant now wants the plan to compensate him for the $5,000 he "lost" due to the delay in his distribution.

Has anyone seen any articles or case law on this issue (or have any opinions--informed or otherwise)? There is nothing in the plan document or SPD that suggests a participant will receive the value of his vested account balance as of any particular date.

Thanks for any guidance.

[Bird]

I'd say that's a permissible time frame for a distribution. If he wanted to lock in a value he should have converted to cash himself; it's self-directed right up to the point of distribution.

[JanetM]

Since participant had access to fidelity's online access he should have seen he didn't have termination date. Onus is on hime,

[Guest Grumpy456]

Thanks for your comments--that was my inclination too.

[jpod]

Has the participant made a written request/demand that could arguably trigger the ERISA claims review procedures? If so, the Plan Administrator should follow those procedures. I'm not saying the claim isn't bogus, I am just suggesting that you address and deny the claim in accordance with the procedures

[Guest mjb]

ERISA does not allow a recovery by a participant for lost profits because such claims are for money damages and ERISA only allows recovery for benefits. See Goeres v. Charles Schwab Co, 2004 WL 2203474. If he files a complaint treat it as a claim for benefits and deny the claim under the plans's claim procedure.

[Mike Preston]

And watch the LaRue case.

[Guest mjb]

And what is the basis for his claim under ERISA 502(2) and (a)(3)? Please explain. Inquiring minds want to know how money damages are available under a claim for equity. Don't you think the Supremes took the case to bury the theory that money damages are a form of equitable relief. If "other equitable relief" under ERISA 502(a)(3) includes money damages why did Congress limit recovery for claims under ERISA to equitable relief.

[Mike Preston]

No need for me to explain. We'll let the Supremes do that!