Retirement Plans and Benefits

Q: What retirement benefits might an affected employee or his or her family be entitled to?

Retirement benefits include the following:

• employer sponsored pensions (so-called defined benefit plans);
• employer sponsored 401(k) plans (or other defined contribution plans);
• union or multiemployer sponsored pensions or 401(k) plans;
• individual retirement arrangements (IRA); and
• Social Security retirement benefits - Most people age 62 or over qualify for Social Security retirement benefits. For more information, see www.ssa.gov/pubs/10035.html. You may also call the Social Security Administration's toll-free number, 1-800-772-1213, or visit your local Social Security office. For the location of the Social Security office nearest you, visit www.ssa.gov/locator.

Not every employee or his or her beneficiary would be entitled to these benefits. Entitlement depends on what plans the employer has in place, as well as any plan rules relating to eligibility and vesting (generally based on years of service with the employer or union). All plans have standards you must meet to qualify for benefits. Only vested benefits are paid.

Most people age 62 or over qualify for Social Security retirement benefits. For more information, see www.ssa.gov/pubs/10035.html. You may also call the Social Security Administration's toll-free number at (800) 772-1213 or visit your local Social Security office. For the location of the Social Security office nearest you visit www.ssa.gov/locator. See also the Social Security Section of this Handbook.

How can I find out what benefits I am entitled to either as a disabled employee or beneficiary of a deceased employee?

A first step in determining these benefits would be to contact the Plan Administrator or other plan official at the employer or union office for complete information on filing a claim for your benefits.

For each plan, you should obtain a copy of the plan's summary plan description (SPD). This is a document that the Plan Administrator must furnish to each plan participant and beneficiary. It gives a detailed summary of the plan: how it works, what benefits it provides, and how they may be obtained. The SPD is also required to spell out your rights and protections under ERISA, the federal law that covers most employer sponsored benefit plans.

Some employers lost their records in the WTC disaster, so you should try to gather and examine whatever paperwork you have concerning the employed person's retirement
benefits.

How are retirement benefits paid under a pension plan?

In a typical pension plan, benefits are payable at normal retirement age, but may also become payable in the case of the disability of the employee, or to a surviving spouse in the case of death of the employee. Many pension plans provide benefits to non-spouse beneficiaries in the case of death. The forms of the retirement benefit payments (lump sum or annuity) will be specified by the plan and are subject to a series of complex rules. The Plan Administrator will provide detailed information about the various forms of payment. You should consult a tax advisor before selecting a form of payment.

How are retirement benefits paid under a defined contribution plan (such as a 401(k) plan)?

Most profit sharing and 401(k) plans permit lump sum payments upon termination of employment or death. While these plans also permit a participant to designate a non-spouse beneficiary to receive benefits upon the participant's death, there are rules that protect the spouse as beneficiary. If an employee selected a beneficiary other than his or her spouse, the spouse must have consented in writing, witnessed by a notary or plan representative in order for the alternative designation to be effective.

How do I make a claim for benefits under these plans?

Each plan will have a written procedure for processing claims for benefits and for appealing if the claim is denied. This information will be found in the SPD. If for any reason information concerning the filing of a claim has not been provided, you may make a claim in writing to the employer or union or the Plan Administrator. Generally, claims for benefits are processed within 90 days, although 401(k) plans are typically faster than traditional pension plans. You may be required to provide proof of death. If you receive notice that your claim has been denied, the SPD will contain information about how you can appeal the decision. Additional information and assistance can be obtained through the Department of Labor (see below).

Who can I contact for more information about pensions and 401(k) plans?

You should first contact your Plan Administrator and/or union representative. They will have specific information on the plans provided by the employer or union of the affected employee.

The Pension and Welfare Benefits Administration of the Department of Labor is also a good resource for information about your rights under federal law. While service in its New York regional office is being restored since its destruction in the WTC disaster, inquiries from plan participants in the New York region are being directed to its national office at (202) 219-8776. You may also write to them at:

U.S. Department of Labor
Pension and Welfare Benefits Administration
200 Constitution Ave., N.W.
Washington, D.C. 20210

For more detailed benefits information on the web, you can log onto www.dol.gov/dol/pwba.

Can I use money in my traditional Individual Retirement Arrangement (IRA) to pay for medical expenses?

If the expenses are not deductible (which means they do not exceed a certain percentage of your income) any amounts you withdraw from the IRA will be subject to a 10 percent penalty for early withdrawal. Any amounts withdrawn are taxed as ordinary income. You should consult a tax advisor before withdrawing money from an IRA.

What should I do if I am the beneficiary of an IRA?

If you have been designated as a beneficiary of an IRA you will have several options regarding the amounts in the IRA. The options will vary depending on the age of the IRA owner and whether the IRA owner had begun distributions. Several options allow you to leave the assets in the IRA so they continue to grow on a tax deferred basis for a period of time. Your decision about the timing and form of an IRA distribution will have serious tax consequences, so you should contact a tax advisor before taking a distribution from an IRA. You should contact the IRA custodian for more information on how to obtain a distribution. The custodian is the bank or brokerage firm holding the IRA assets. See the Personal Finance Section of this Handbook for more information on contacting banks and brokerage firms.

Where can I get more information about IRAs?

For more information you can read IRS Publication 590-Individual Retirement Arrangements and other helpful tax resources available on the Internal Revenue Service website www.irs.gov. You can also call the New York office of the IRS at (800) 829-1040.

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