Compliance September 2, 2010

401(k) Participant at Fault in Account Withdrawal Dispute

A federal judge in Oklahoma has cleared a 401(k) plan administrator of wrongdoing in a dispute over whether the employer should be forced to repay the participant for funds his ex-wife took out of his account.
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U.S. District Judge Gregory K. Frizzell of the U.S. District Court for the Northern District of Oklahoma declared that it was actually plaintiff William Foster’s own fault that his ex-wife Patricia was able to access the funds.

Even though the plan documents of the PPG Industries Employee Savings Plan required participants to notify the company of any address change, William failed to do so after his 2004 divorce when he left the Tulsa home he and his ex-wife had shared, Frizzell said.

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According to the ruling, William found out about the withdrawals after receiving a1099-R form from Fidelity Investments showing a gross plan distribution of $42,126.38 in 2005. Foster demanded the plan replace the money, but the administrator contended the benefits were paid in accordance with plan terms. The administrator countered that the loss was due to William’s failure to notify the plan of his address change and his ex-wife’s fraudulent conduct. William sued the plan over the dispute.

Frizzell recounted in the ruling that the plan mailed a document to the Foster home in early 2005 describing changes in how participants would access their accounts. It included an explanation of how a User ID created by the participant would replace the social security number for identification purposes.

Patricia received the document and made an online request to put in place a new User ID, which the plan confirmed in April 2005. The following month, according to the opinion, Patricia changed the account password, changed the listed permanent address to a post office box and withdrew $4,000 from the account. During the next several months, Patricia drained the account, the court said.

In his ruling, Frizzell rejected William’s argument that by virtue of his years of service, his benefits were vested and were nonforfeitable under the Employee Retirement Income Security Act (ERISA), and so he could enforce his “unconditional” right to benefits against the plan.

 

Diversions September 2, 2010

One to Three Drinks a Day is A-OK

A new study in the journal Alcoholism: Clinical and Experimental Research provides the strongest evidence yet that moderate drinking can make you live longer.

 

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The conclusion is not new–it’s been proven before that those who abstain from alcohol altogether live shorter lives than those who drink. Alcoholics Anonymous has always given as an explanation for this pro-alcohol perspective that most abstainers in these studies are former alcoholics themselves, who have severe health problems caused by their previous alcohol-fueled lifestyle.  

But that was not the case in this 20-year-long study conducted by six researchers at the University of Texas, Austin.  They controlled all the normal variables–socioeconomic status, level of physical activity, number of close friends, quality of social support and so on–and with all of those things taken out of the equation, mortality rates were still highest for those who had never been drinkers, second highest for heavy drinkers, and lowest for moderate drinkers. 

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The statistics are rather striking. Of the 1,824 participants, 69% of the abstainers died during the 20 years, 60% of the heavy drinkers died, and only 41% of moderate drinkers died. 

How can it be that those who never touch alcohol have a worse mortality rate than heavy drinkers?  The study pointed to several possible factors: 

  • People who abstain from alcohol are commonly from a lower socioeconomic class, meaning they have more life stressors–financial worries for one thing–which can lead to heart problems. 
  • People who drink alcohol are getting vital stress-relief from their beverage, as well as being more likely to socialize with friends and family, another major form of stress relief. 

The study is not condoning heavy drinking, of course. Being an alcoholic may not shorten your life, but it can make the life you’re living much more challenging.    

Moderate drinking seems to be the way to go. The researchers defined moderate drinking as one to three drinks a day; ideally, opting for red wine.   

 

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