DC Plan OK in Distribution Policy

June 25, 2004 (PLANSPONSOR.com) - A federal judge turned back efforts by a retiree who was a participant in a defined contribution retirement plan to force the plan to take his annual distribution from a single fund rather than pro rata from each fund.

The judge in the U.S. District Court for the Northern District of Ohio decided that the plan’s benefits committee had the right to implement a pro rata distribution rule and that the plan had consistently applied the rule to all participants, EBIA said. Doing so did not violate the Employee Retirement Income Security Act (ERISA), the court said.

The plan was also not out of bounds when it did not provide the retiree with financial documents for one of the plan’s funds.

In his lawsuit, the retiree claimed that, among other things, the plan’s refusal to make the distribution the way he wanted it violated his rights under the plan and the summary plan description (SPD). The retiree had also complained that the SPD didn’t explicitly spell out the pro rate distribution policy.

The case is Hickey v. Pennywitt, 2004 U.S. Dist. LEXIS 10734 (N.D. Ohio 2004).