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Who Is a 'Participant' in a Nonqualified Plan? Second Circuit Case Highlights Importance of Plan Definitions
Porter Wright Morris & Arthur LLPLink to more items from this source
Feb. 24, 2015

"The Company had tried to argue that retired participants should be viewed as a 'subset' of participants, and thus subject to the lump sum cash-out provision upon a change in control. In fact, many employers often view 'participants' as covering both active employees as well as former employees or retirees who have not received full payment under the plan. The court rejected the Company's argument, however, stating that the Plan clearly defined a 'participant' as an active employee and a 'retired participant' as a retiree. Even if the Company never intended to distinguish active and former employees in this manner, the court concluded it could not ignore the clear text of the Plan." [Gill v. Bausch & Lomb, No. 14-1058 (2d Cir. Dec. 3, 2014)]

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