Suspension of benefits

[Guest jim zentner]

We have a client who is a participant in a multi employer plan. He retired in February of 1997 under an early retirement provision at age 56. The plan allowed retirees to go back to work for contributing employers and still receive their monthly check. In October of 1997, the trustees amended the plan to disallow retirees to work unlimited hours and collect their checks. The amendment complies with ERISA and DOL rules and we are not arguing this. What our question and argument is, can they retroactively apply this amendment to someone who specifically made a retirement decision based on the previous rules of the plan? We are using the 1982 2nd Circuit Ct decision of Teamsters v Hoh as our argument that the trustees were arbitrary and capricous in their application of this upon retirees. What does anyone else think? Are there newer rulings or contrary ones that we need to review before and arbitration hearing?

[Guest Killer Joe Ribakoff]

Jim Z:

An early retirement benefit is an accrued benefit. Absent haedship approval, it cannot be reduced by a plan amendment. 29 usc 1054(g).

[Guest Keith N]

I'm not exactly sure of your question. When you say "can they apply retroactively" do you mean they are going to seek repayment of past benefits or that they are going to cease all future payments as long as he continues to work? If they are going to cease future payments, was your client given a Suspension of Benefits Notice?

Are you arguing the the only reason that he retired was based on the assumption that he could return to work and that if he knew that the plan would not provide for in-service distributions he would not have retired?

I'm not sure if the 411(d)6 rules relating to anti cut back apply to this. His accrued benefit isn't really being cut. The Plan was simply ammended to no longer permit in-service distributions and I'm not sure that there is anything legally wrong with that. (Assuming he was given a Suspension of Benefits Notice when his benefits were stopped)

[KJohnson]

A day late and a dollar short, but look at a 5th Circuit decision called Spacek in where a Court goes through a 411(d)(6) analysis regarding a multi's implementation of new suspension of benefit rules and finds no violation.