AboutAllen Expertise Pension questions ONLY. Pension, profit sharing, and 401(k) plan design, installation, administration and actuarial services; rollovers to Individual Retirement Accounts; taxation of retirement plan distributions
Experience Over 35years experience in the pension field
Organizations Various actuarial organizations
Education/Credentials MBA and various professional certifications
Question QUESTION: My husband and I would like to withdraw his pension to use as a down payment on our first home. My husband used to work with the union and that is when the pension started. Two years ago he left the union for a non union company. Now he has a 401k. The pension is now just sitting there with nothing being added, though it has been losing money because of the poor economy. When we asked about removing the pension early we were told that my husband must sign a contract stating that he is no longer working in the electrical industry in order to withdraw his pension. Does this sound right or is the company just trying to prevent us from removing his pension?
ANSWER: I don't believe the company is deliberately withholding the money. I'm guessing but I believe the plan is what is known as a muti employer plan. It probably states that a participant can only receive a distribution under certain circumstances such as reaching the retirement age, death, disability or termination of employment. Termination may be defined as not working in the industry. They therefore can not distribute without proof that he no longer works in the industry.
There may be other alternatives if you can't provide the statement. The plan may allow for what are known as hardship distributions. Purchase of a home may be defined as a hardship. Or the plan may allow a participant to borrow money from his account.
Check with whomever administers the plan.
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QUESTION: Are there specialists that can be contacted to help my husband and I try to withdraw his pension and if so where can I find one?
Answer You can contact an attorney in your area who works in the ERISA or pension areas. However, the attorney will not be able to get your husband the money if it's not permitted under the terms of the plan. Also, you will have to pay income tax + a 10% penalty tax on any money distributed to your husband before age 59 1/2.
