For more stories like this, sign up for the PLANADVISERdash daily newsletter.
Compliance May 19, 2010
Employer not Required to do Hardship Withdrawal Disclosure
The Bank of America Corp. (BofA) was under no obligation to provide detailed disclosures about its 401(k) plan hardship withdrawals.
Reported by Fred Schneyer
U.S. District Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District of Illinois said Section 102 of the Employee Retirement Income Security Act (ERISA) carries no mandate for plans to explicitly set out the conditions under which participants can take a hardship withdrawal.
Former BofA employee Jeffrey Wescott alleged in his lawsuit that he made a request for an emergency withdrawal of $165,000 from BofA’s 401(k) for highly compensated employees. BofA approved Wescott’s request for a withdrawal, but it limited the withdrawal to $25,000.
BofA argued that the plan qualified as a top-hat plan and was exempt from disclosure rules imposed by ERISA Section 102. BofA further argued that even if the plan was found to be subject to Section 102, that provision of ERISA does not require detailed information about hardship or emergency withdrawals.
The case is Wescott v. Bank of America Corp., N.D. Ill., No. 09 CV 3221.
« Fidelity Reports 401(k) Balances up 55% Since Market Bottom