ERISA plan document disclosure to former participant

[30Rock]

I have a plan sponsor who received a request for plan documents for the attorney (looking for plan mis-management) on behalf of a former participant - she was paid out in 2022 and has no account balance. Is a sponsor required to provide plan documents for the period of time the former participant was in the plan - for example documents covering 2019-2022 plan years when they were an active participant? In my reading of ERISA and DOL regulations I only see references to "participant" or beneficiary, which I interpret to mean an individual with an account balance.

Thank you.

ERISA 104(b)(4)

(4) The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. The administrator may make a reasonable charge to cover the cost of furnishing such complete copies. The Secretary may by regulation prescribe the maximum amount which will constitute a reasonable charge under the preceding sentence.

 

DOL Reg. 2510.3-3(d) -

(ii) An individual is not a participant covered under an employee pension plan or a beneficiary receiving benefits under an employee pension plan if-

(A) The entire benefit rights of the individual-

(1) Are fully guaranteed by an insurance company, insurance service or insurance organization licensed to do business in a State, and are legally enforceable by the sole choice of the individual against the insurance company, insurance service or insurance organization; and

(2) A contract, policy or certificate describing the benefits to which the individual is entitled under the plan has been issued to the individual; or

(B) The individual has received from the plan a lump-sum distribution or a series of distributions of cash or other property which represents the balance of his or her credit under the plan.

 

[QDROphile]

First, be careful not to conflate “plan sponsor” and “plan administrator” even though it is a common mistake to name the plan sponsor as the plan administrator. If the plan sponsor is named as the plan administrator, it can still be important to make sure one understands the separate roles of the sponsor and the administrator, and make sure the right hat is being worn in any action or decision, even if the hats are on the same head.

Next, your question is really bigger than whether or not plan documents are required to be provided under the circumstances. The choice about providing plan documents, even if they are not required to be provided is not trivial if somebody is looking for trouble. Perhaps that bigger question is not really your question, because it is really a question first for the plan administrator and you are probably not providing comprehensive advice about how to respond to the request for documents.
 

Apologies for not giving a direct answer to your literal question, but your channeling of a definite answer might actually be a bad thing for the ultimate recipient. I will offer a footnote answer. If the former participant decides to make a claim for benefits (under a theory that the amounts actually received were the wrong amounts because of some mismanagement) the participant eventually will be entitled to examine plan documents under the claims procedures.

[30Rock]

I think what is happening is that litigators are using AI to seek participants in a plan who maybe were the subject of excessive fees - investments, recordkeeping. And this former participant responded to this litigator inquiry and now the plan administrator is questioning what to supply. I could see providing documents if the former participant had an actual claim for benefits and wanted to see the appeals procedure in the SPD. I think in this situation, the law firm is hunting for a plan to sue. Not that it applies in this situation, but does the ERISA statute of limitations of 6 years come into play?

[Paul I]

I am not an attorney, but I do have a recollection that the issue came up with a client many years ago of whether a former participant is entitled to plan disclosures.  With a little research, I found the case - Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).

Part of the results included (edited for relevance here) 

2. A "participant" entitled to disclosure under § 1024(b)(4) and to damages for failure to disclose under § 1132(c)(1)(B) does not include a person who merely claims to be, but is not, entitled to a plan benefit. [The] definition of a "participant" as "any employee or former employee . . . who has a reasonable expectation of [having] a colorable claim to vested benefits. Moreover, a claimant must have a colorable claim that (1) he will prevail in a suit for benefits [.] This view attributes conventional meanings to the statutory language, since the "may become eligible" phrase clearly encompasses all employees in covered employment and former employees with a colorable claim to vested benefits, but simply does not apply to a former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits. Congress' purpose in enacting the ERISA disclosure provisions -- ensuring that the individual participant knows exactly where he stands -- will not be thwarted by this natural reading of "participant," since a rational plan administrator or fiduciary faced with the possibility of $100-a-day penalties under § 1132(c)(1)(B) for failure to disclose would likely opt to provide a claimant with the requested information if there were any doubt that he was a participant, especially since the claimant could be required to pay the reasonable costs of producing the information under § 1024(b)(4) and Department of Labor regulations.

I leave up to our BL legal colleagues to provide input on whether or how this case may be applicable to this situation.

 

[30Rock]

That is awesome. I figured it would come down to case law interpretation. I do not have all the details on this former employee but I will convey this information to the plan administrator to discuss with his legal counsel. Thank you very much!

[BG5150]

I would think that absent a lawsuit where the plan administrator would have to provide documents under discovery, this ex-participant is out of luck.

And what documents fall under that 'disclosure' rule?  I would think simply SPD (and SMMs), SAR and any fee disclosures while they were a participant.

[30Rock]

True - they could always subpoena the plan.