Plan Amendment's effect on terminated employees

[Guest sgriff]

Can anyone point me to some legal authority for the proposition that when an employer amends a plan, the plan amendment will not apply to those persons who have terminated employment prior to the plan amendment. In our situation the plan document was silent on this issue, but I would assume there are cases or something of the like out there that would support this finding that an amendment would not apply to former employees.

The real issue is that the term "compensation" was amended to include several more items than the plan originally did (which was in effect when the employee terminated employment). The employee is now ready to begin receiving benefits under the plan and wants to include in "compensation" the items that the new plan permits, as opposed to what the original plan permitted while he was employed.

Thanks to all who respond!

[david rigby]

Does the amendment have an effective date, either in the amendment itself or in the resolution that adopts it?

If there is an effective date, that should imply that it is not retroactive unless specified otherwise.

[Guest]

As far as I know there is no prohibition against an amendment increasing the benefit for terminated vested participants. I have seen some plans grant increases, but it is very rare.

If the employer doesn't want to increase their benefit, they should make sure the amendment has a clear effective date. As PAX said, generally the preamble or the resolution states the effective date and the participants that the amendment applies to.