Employer Lied

[Raulc2k]

Hello,

I'm wondering if I can do sue my employer for lying to me regarding my pension plan.

Back in June I decided to quit my job and I already had an offer with a new employer.When I left I decided to cash in my pension where I was 100% vested in. I sent in all necessary paperwork and I was told everything was received and they would begin the distribution process, but that it would take 3 months for the distribution to take place. Before I began working for my new employer I received a call from my previous employer asking me to come back and work for them. It was really tempting to go back because they offered a raise but I rally needed the money from the pension plan since I have a lot of debt I wanted to pay off with that. Before I accepted going back to my previous employer, I called HR Pension department and explained my situation. I asked them if I would still be able to get my pension distributed to me if I went back to work for the company. HR Pension department told me that because I started the process while I was separated from the company everything would go accordingly and I would get my money in September. They told me that even if I went back to work for the company there was no way of stopping the distribution. Based on this information I decided to go back to work with my previous employer and give up the offer I had with the new employer. The day of the distribution came and I didn't see the money in my account so I decided to call them to see what was happening. To my surprise they told me that they cancelled the distribution request since I came back to work for the company and I could not make distribution while I was employed. This was totally different from what they told me back in June. This puts me in a difficult financial situation since I was really counting with that money. Is there anything I can do about this? all they did was apologized for the "misinformation"

 

[ElleMD]

What kind of pension are we talking about here? How long were you gone? There may not have been a choice in the matter and depending upon circumstances, it might have been out of your employer's control.

Have you read the plan documents that govern the pension? What do they say about when you can cash out or take a distribution? Those documents I can virtually guarantee have some kind of clause to the effect that the terms of the documents supersede any assertions or verbal statements made with regard to the pension.

 

[Raulc2k]

It just says this:


The vested value of your plan benefit is payable if any of the following events occur:


 Your employment with XXXXXXX ends;


 You die; or


 You are disabled and have been receiving benefits under the XXXXXX Long-Term Disability (LTD) Plan for more than 18 continuous months.


It does not specify anything about being employed at the time of distributing the funds. I was separated from the company 2 months and I started the request while being separated.

 

[zddoodah]

I'm wondering if I can do sue my employer for lying to me regarding my pension plan.

Anyone can sue anyone for anything.

I asked them if I would still be able to get my pension distributed to me if I went back to work for the company. HR Pension department told me that because I started the process while I was separated from the company everything would go accordingly and I would get my money in September. They told me that even if I went back to work for the company there was no way of stopping the distribution.

What makes you think these were "lies" as opposed to the person(s) who made these statements simply being mistaken?

This puts me in a difficult financial situation since I was really counting with that money.

How do you figure? Seems to me your situation hasn't changed in the slightest? Indeed, it seems that your situation has improved. Your debt level is the same. You still have your pension. And you are now making more money than you were making before. You also won't suffer any tax consequences of what presumably would have been an early withdrawal of your pension without rolling the money into an IRA. Whether the statements made to you were lies or simple mistakes, I don't see how you have been damaged at all.

Is there anything I can do about this?

I'm sure there are lots of things you "can do," including quitting your job again. Since you said you were going to pay off debt with the pension distribution, have you asked the pension administrator if you can take a loan from your pension for that purpose?

 

[Raulc2k]

Well.... If they that given me the "Correct" information from the beginning I wouldn't had return to work for the company and would had stared working for the new company with a similar salary. By now I would have had access to the money from the pension and would had paid off the high interest debt that I have and would stop paying interest. I am making a little more money now but it does not compares to the money from the pension that would allow me to be debt free. Yes I understand, no pension but debt free not having to pay interest. How is paying high interest better for me when the pension is only earning 3%?

 

[army judge]

How is paying high interest better for me when the pension is only earning 3%?

No one can answer that for you, but you.

Each person's financial position is unique.

As an example, a woman can quit working and retain more of her money by paying less in taxes.

I suggest you run your question by your CPA or tax attorney.

 

[Raulc2k]

zddoodah said that Im in a better financial position, when he has absolutely no idea on my financial situation. I was simply responding to him. I'm well aware of my situation and getting that distribution is the best thing for me.

 

[army judge]

. I'm well aware of my situation and getting that distribution is the best thing for me.

.



A person can take a legal 25% lump sum from their pension holdings at age 55 or over tax-free, accessing your pension earlier isn't what the pension holdings are intended for, and is viewed as an unauthorized payment.

So the tax you'll pay for liberating your funds can be a MASSIVE 55%, as well as charges of up to 30% to the firm which does it for you.

This could be your dilemma.

There are some funds which only allow EMERGENCY (or certain life event) withdrawals.

Emergency access to those funds isn't allowed to pay debts.

As suggested you need to discuss this with the agency, department, or person responsible for managing your employer's pension assets.

 

[Raulc2k]

Wow how did this conversation go from one topic and went to going over what is best for me financially. My legal question was if it was ok for my employer to give me false information on something knowing that the information I got would be critical to my decision of going back to them or not.

 

[Raulc2k]

.



A person can take a legal 25% lump sum from their pension holdings at age 55 or over tax-free, accessing your pension earlier isn't what the pension holdings are intended for, and is viewed as an unauthorized payment.

So the tax you'll pay for liberating your funds can be a MASSIVE 55%, as well as charges of up to 30% to the firm which does it for you.

This could be your dilemma.

There are some funds which only allow EMERGENCY (or certain life event) withdrawals.

Emergency access to those funds isn't allowed to pay debts.

As suggested you need to discuss this with the agency, department, or person responsible for managing your employer's pension assets.

I took the distribution when I was separated from the company. They processed it and told me that it would be paid to me on September 1st. They asked me to go back to work for them. I told them I would go back to them but I needed to be sure I was able to get that money from the pension distribution I started while being separated. They told me "YES ypou can get the money if you come back to work for us". When I went back to work for them they said "Oooops we had to cancel the distribution because you came back" How is doing something like that ok for them?

 

[cbg]

Pension distributions are highly regulated by Federal law. If you were accidentally given incorrect information initially, it does not change the employer's obligation to follow the law. (And that's assuming they did give you incorrect information and you didn't misunderstand.) With VERY limited exceptions, you cannot take a distribution from your pension plan while you are still employed with the employer in question. Not even if they mistakenly said you could. That is the law.

 

[hrforme]

have to agree....there are very specific distribution rules and often the IRS is looking for fake terminations that happen just to be able to take a distribution. Getting one after you returned to work would possibly throw a red flag on the pension plan. It is possible the person who gave you the information was simply incorrect and had never been in this situation before.

 

[army judge]

How is doing something like that ok for them?

I'll allow YOU to answer that question to avoid going off track and agitating you again.

Do yourself a favor, don't waste your valuable time responding to me.

I'm an idiot.

 

[zddoodah]

If they that given me the "Correct" information from the beginning I wouldn't had return to work for the company and would had stared working for the new company with a similar salary.

That's not damages.

By now I would have had access to the money from the pension and would had paid off the high interest debt that I have and would stop paying interest.

First of all, you can still get access to the money by quitting again. Second, if you had pulled the money out, you'd be hit with a tax penalty.

zddoodah said that Im in a better financial position, when he has absolutely no idea on my financial situation.

I didn't say that. Rather, I said it sounded like you're in a better situation. Obviously, I don't know all the details of your financial situation because I only know the information you choose to share.

My legal question was if it was ok for my employer to give me false information on something knowing that the information I got would be critical to my decision of going back to them or not.

That's not actually what you asked. In any event, nothing you described suggests you have any basis for a lawsuit against your employer.

They told me "YES ypou can get the money if you come back to work for us". When I went back to work for them they said "Oooops we had to cancel the distribution because you came back" How is doing something like that ok for them?

It's called making a mistake.

I noticed that, despite posting four separate follow up posts, you didn't answer the question I asked: have you asked the pension administrator if you can take a loan from your pension for the purpose of paying your high interest debt?

 

[ElleMD]

Again, it depends entirely on the terms of your pension plan, your job, the new job, public vs. private sector, various state/federal/local regulations, your employer's policies, and the lengths of time in between going and coming back, etc. I'll give you an example.

The pension plan I am in requires a 45 day break in service in order to receive a distribution as "retired". So yes, it is possible to come back after leaving, keep your pension, and collect a salary (there are a few other caveats on that but I won't bore you with the details), BUT only if you have been off payroll for 45 days before restarting. Come back on day 44, and no distribution for you.

My aunt was in the same plan I was but entered at a different time when the rules were slightly different and she was grandfathered in under those rules. There is no 45 day wait for her. State regulations limit the types of positions she is eligible to be hired into and the conditions.

The person in the office next to me is in a different pension and there is no 45 day rule, but there is a limit on how long you may work after returning.

This is why the actual plan documents (or if a public sector pension- the regulations governing the pension) are what control. There is often no one size fits all answer and it is quite possible that even if you give someone a technically correct response (you can collect a distribution and return to work), it is possible they will do it in a way that falls under an exception (<45 days, etc.). Or, the person you talked to could just make a simple human error. If the answer is that important, read the document that has the rules outlined and don't rely on one person's say so.