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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
An e-mailed list of frequently asked questions (FAQs) sent by the employer explicitly stating that the participant was ineligible for an enhanced pension benefit was not enough to meet the futility exception to the exhaustion of remedies rule, according to the U.S. Court of Appeals in St. Louis (CA-8). Thus, a participant who thought he was entitled to an enhanced benefit under a "change in control" provision must exhaust his administrative remedies with the plan prior to filing suit.
Change in control provision
The change in control provision in the plan made participants eligible for enhanced retirement benefits if their employment was involuntarily terminated within three years of a change in control. In 2008, the employer was sold. In 2009, the new owner agreed to sell the participant’s subsidiary to a private equity firm. Before the sale was finalized, the participant received an e-mail captioned "Salaried Employee Transition Frequently Asked Questions." This e-mail stated that the participant would not be eligible for the enhanced benefit after his termination of employment.
On the day the sale was finalized, the participant filed an ERISA class action seeking benefits under the change in control provision. The district court dismissed the suit for failure to exhaust administrative remedies.
Purposes of exhaustion rule
Exhaustion of remedies is, the appellate court explained, a judicially created requirement intended in part to give plan administrators a chance to correct errors and to decrease the cost of dispute resolution. The requirement can be waived only if (1) the plan provides no administrative remedy, or (2) the participant demonstrates that pursuit of the remedy would be futile.
The participant conceded that plan language provided an administrative remedy but argued that the FAQ e-mail demonstrated the futility of filing a claim with the plan. The court chided the participant for his pessimism. While the e-mail may provide "some indication" of what the plan administrator’s position would be if a claim were filed, it does not show with certainty that the participant’s claim would have been denied.
Source: Angevine v. Anheuser-Busch Companies Pension Plan (CA-8).
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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