In granting summary judgment in favor of IBM, the court said the company was not wrong in denying additional interest credits to Richard Adams’ distribution per the terms of the plan. The pension plan dictated that employees make a distribution election within a month following retirement and also dictated that interest credits would not be given on lump-sum distributions after a participant reached normal retirement age of 65.
According to the opinion, while the plan allowed for interest credits to continue to accumulate for pension plan accounts for which distribution was deferred, the participant was required to make an election to defer the distribution in order to receive the interest credits.
Adams retired in May 2003 at the age of 67. He chose not to make a distribution election because he had a dispute with IBM regarding the calculation of his pension benefit and was awaiting results of pending litigation about the plan.
When Adams did elect to receive a lump-sum distribution of his pension account balance in September 2005, he asked for interest on the account balance to be paid for the period from May 2003 to the time of his distribution. The plan administrator denied the request because Adams did not make a timely distribution election and because the plan did not pay interest on lump sums after a participant turned age 65.
The case is Adams v. IBM Corp.