Pension Plan Frozen?

[Guest seepajd]

My client worked for co' for 8 yrs. Co. funded pension plan under ERISA.

Co has let go about 15 individuals this yr alone (join the club, right)

other ee who have been let go and were vested were given the proper forms

for obtaining their pension funds, either to roll-over, or take a one-time payment.

The administrator told client that her share was "frozen" due to a new law

passed by the Senate indicating something to the effect that since there assets

have decreased by more than 80% they can not release her share.???

I didn't think there was any provision that would allow the seperated ee to

not have access to their funds,

i just sent a letter to the plan administrator, am I going to havce to file claim in fed. court?

thanks,

Joe Dadich, Esq, CPA

seepajd@hotmail.com

Southfield, MI 48034

[AndyH]

Are you reporting all the facts? The lump sum option may well be "frozen", but the participant should have the right to an annuity payment. Are you certain that he/she does not? Your client should ask these questions to the employer in writing and request a written response, IMHO, i.e. what payment options are available when, and what if any payments are "frozen".

[SoCalActuary]

The law change is IRC 436, effective in 2008. Don't waste your client's time on suing anyone yet.

My client worked for co' for 8 yrs. Co. funded pension plan under ERISA.

Co has let go about 15 individuals this yr alone (join the club, right)

other ee who have been let go and were vested were given the proper forms

for obtaining their pension funds, either to roll-over, or take a one-time payment.

The administrator told client that her share was "frozen" due to a new law

passed by the Senate indicating something to the effect that since there assets

have decreased by more than 80% they can not release her share.???

I didn't think there was any provision that would allow the seperated ee to

not have access to their funds,

i just sent a letter to the plan administrator, am I going to havce to file claim in fed. court?

thanks,

Joe Dadich, Esq, CPA

seepajd@hotmail.com

Southfield, MI 48034

[rcline46]

If benefits became restricted, the employer was required BY LAW to distribute a notice to ALL participants describing the restriction. Get a copy of the notice. There are rather draconian penalties for not distributing the notice.

[AndyH]

Great point.

[david rigby]

Although not relevant to the question of "frozen", this plan may have experienced a partial termination.

[SoCalActuary]

Although not relevant to the question of "frozen", this plan may have experienced a partial termination.

But the post said nothing about vesting issues, and 436 gives no exemption for partial termination.

[david rigby]

But the post said nothing about vesting issues, and 436 gives no exemption for partial termination.

Yes, that's the part about "not relevant". I just want to point out that a partial termination could be relevant if some of the 15 layoffs are not vested.

[tymesup]

Since this employee worked for 8 years, she is probably vested already. A partial termination could only hurt her, by increasing the liabilities.

If 436 already kicked in, how badly is this plan funded after the 2008 meltdown?

The original post attributed the new law to the Senate. Let's give props to the House and the President, too.