Don’t think that employees who take their retirement benefits in a lump sum can’t sue for alleged fiduciary breaches. A recent federal appeals court decision says although retirees are not technically employees anymore, they still have standing to sue on allegations the administrator didn’t do enough to protect the pension rights of plan participants.
Recent case: Jerry Vaughn and other former employees who took pensions in a lump sum sued, alleging the plan administrator hadn’t been vigilant about investing their retirement funds. The plan said only current employees have the right to sue. But the 9th Circuit Court of Appeals said that was not the case. (Vaughn v. Bay Environmental , Inc., No. 05-17100, 9th Cir., 2008)
Final note: It may be safer to outsource pension plan administration to professionals. The liability will be theirs as long as you prudently chose them.
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