{"id":91,"date":"2020-07-01T16:35:00","date_gmt":"2020-07-01T16:35:00","guid":{"rendered":"https:\/\/pensionjustice4you.net\/wpblog\/?p=91"},"modified":"2024-12-12T16:38:35","modified_gmt":"2024-12-12T16:38:35","slug":"commit-a-crime-risk-having-your-retirement-account-garnished","status":"publish","type":"post","link":"https:\/\/pensionjustice4you.net\/wpblog\/erisa\/commit-a-crime-risk-having-your-retirement-account-garnished\/","title":{"rendered":"Commit a Crime? Risk Having Your Retirement Account Garnished"},"content":{"rendered":"\n

If you are in a private-sector pension plan covered by the Employee Retirement Income Security Act (ERISA), you may have been told that your pension benefits cannot be \u201calienated.\u201d That is, creditors cannot touch your employer-provided pension or retirement funds while those funds are in the plan. However, ERISA\u2019s anti-alienation rule only goes so far, as one criminal recently learned. United States v. Frank, No. 1:17-cr-114 (E.D. Va. May 6, 2020).<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

In 2017, Lawrence Frank pled guilty to one count of wire fraud for embezzling over $19.4 million from his form employer, NCI Information Solutions, Inc. (NCI). Frank was sentenced to 78 months imprisonment followed by three years of supervised release and ordered to pay $19,440,031.00 in restitution to NCI. As of March 2020, NCI had recovered only $7.2 million in restitution, leaving a $12.2 million shortfall.<\/p>\n\n\n\n

In September 2019, the government filed an application in federal district court to garnish Frank\u2019s 401(k) account which had approximately $479,505 in assets at that time. Frank opposed the government\u2019s garnishment application, arguing that (i) the funds in his 401(k) account were protected under ERISA\u2019s anti-alienation rule, (ii) the funds were properly characterized as wages, salary, or other income and therefore subject to the 25% garnishment cap under the Consumer Credit Protection Act (CCPA), and (iii) even if the court concluded that the government could reach his 401(k) funds, it should let him keep 15% so as to cover his tax bill and facilitate his re-entry into society upon completion of his sentence.<\/p>\n\n\n\n

The federal district court rejected each of Frank\u2019s arguments. It explained that the Mandatory Victims Restitution Act (MVRA) overrides ERISA\u2019s anti-alienation provision, authorizing the enforcement of restitution orders through garnishment of retirement accounts. Further, the CCPA\u2019s 25% cap applies solely to periodic compensation, but the government was seeking a one-time lump-sum distribution of Frank\u2019s 401(k) funds. Finally, while Frank might incur an early withdrawal penalty and taxes on the distribution, the court would allow Frank to keep only 10% of the 401(k) funds to cover those amounts. The court reasoned that, allowing Frank to retain an additional 5% of the 401(k) funds to assist him in reentering society \u201cwould not be fair to the victim\u201d to whom the restitution was owed.<\/p>\n\n\n\n

It should also be noted that, once a participant takes a distribution of his retirement funds, those funds may be garnished to satisfy a creditor, regardless of whether the participant has committed a crime. Bottom line: Don\u2019t commit a crime or fail to pay your creditors if you want to be the sole arbiter of your retirement funds.<\/p>\n\n\n\n

[All Blogs on this page are written by pension lawyer Eva Cantarella who can be reached at\u00a0PensionHelp4You@gmail.com<\/a>,\u00a0ecantarella@hertzschram.com<\/a>, or 248-335-5000. To read more of Eva\u2019s pension posts go to her\u00a0Pension Justice 4 You<\/a>\u00a0Facebook Page and, to receive automatic notifications of new posts, click the Like and Following tabs just below the picture at the top of the Page.]<\/p>\n","protected":false},"excerpt":{"rendered":"

If you are in a private-sector pension plan covered by the Employee Retirement Income Security Act (ERISA), you may have been told that your pension benefits cannot be \u201calienated.\u201d That is, creditors cannot touch your employer-provided pension or retirement funds while those funds are in the plan. However, ERISA\u2019s anti-alienation rule only goes so far, as one criminal recently learned. United States v. Frank, No. 1:17-cr-114 (E.D. Va. May 6, 2020). In 2017, Lawrence Frank pled guilty to one count…<\/p>\n

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