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Losing a Big Chunk of Your Retirement Under ERISA

Posted by David P. Martin | Feb 26, 2017 | 0 Comments

After years of service, Mr. Taylor retired from NCR. He was to receive a survivor annuity benefit of about $29,000 per year for both his and his wife's lives. This retirement was an effective inducement for Mr. Taylor to stick with the company. That benefit can bring much peace of mind for retirement, so maybe the long hours were worth it.

However, after about seven years of retirement, NCR decided to terminate the plan, and then paid Taylor a lump sum benefit attendant with a huge tax bite ($440,976 reduced to $254,063). If this was paid over time as it was supposed to be paid, the tax bite would be much lower.

The lump sum benefit was also reduced to present value at present value factor rates selected by the plan. Neither Mr. Taylor nor his wife had any say in this either. And worst of all, he had no idea it was coming! No one sent him a copy of the changes to the plan. The Taylors were furious and understandably so.

Taylor sued for benefits, statutory penalties, and for breach of duty. NCR failed to give him the changes to the plan, and caught him off guard ruining his monthly retirement budget. The court dismissed all claims. It found the plan administrator had the right to amend the plan. Since this was a top hat plan, it was exempt from penalties. Further, the court found the plan can pick any reduction factor it wants when it amends the plan. No input from the Taylors was required, and it didn't matter if it was fair or not. The entire complaint was dismissed. Taylor v. NCR Corp., 2015 WL 5603040 (N.D. Ga. 2015).

Ouch! ERISA can be tough on professionals, managers, and employees. Know your rights and ERISA regulations; get a free consultation with an attorney here at our ERISA law firm.

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David P. Martin

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