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Compliance December 29, 2010
Lawyer Entitled to 401(k) Distribution
A lawyer accused of financial wrongdoing should receive a 401(k)
distribution of his plan savings from his old law firm, but not the
employer’s contributions, a federal judge ruled.
Reported by Fred Schneyer
U.S. District Judge Oliver W. Wanger of the U.S. District Court for the Eastern District of California held that plaintiff Thomas Anderson should get his plan benefits, which totaled over $700,000, less the amount of an outstanding loan. The court said the plan’s anti-alienation clauses controlled the distribution of Anderson’s nonemployer contributions from the plan. However Wagner said Anderson was not entitled to the $50,000 to $100,000 in employer contributions from his account.
Wanger also turned aside Anderson’s claim that the plan administrator violated the Employee Retirement Income Security Act (ERISA) in not paying the distribution of Anderson’s contributions as requested.
According to the opinion, Anderson’s old law firm accused him of a variety of acts of financial wrongdoing and demanded the rescission of a $150,000 bonus and employer contributions to the 401(k) plan. Douglas Neibauer, who had served as a plan trustee with Anderson, had denied Anderson’s distribution claims until the financial impropriety accusations were resolved.
The case is Anderson v. Strauss Neibauer & Anderson APC Profit Sharing 401(k) Plan, E.D. Calif., No. 1:09-cv-01446 OWW DLB