Help Wanted: 90-day wait for pension is legit

DEAR CARRIE: For 25 years I have worked as a nurse at a large nonprofit hospital. As I plan to retire soon, I asked the benefits department how soon I would start receiving benefits after I leave. I was stunned at what I heard. I was told that I needed to submit certain forms 90 days before so that my benefits will start in a timely manner. I then found out that I would not receive my first check for about 90 days after my last day of work and that I wouldn't receive retroactive payments. The delay in payments is for a "calculation period," I'm told. In the meantime the company told me to plan to use all my accrued time after I retire to make up for the loss of benefits. I always believed that when you retired, your pension check started from day one and, if not, you received retroactive checks. Neither is the case. Is this legal?

-Pension StunnerDEAR PENSION: I turned to a pension-rights lawyer for answers. She points out that a 90-day waiting period is acceptable policy.

"It is not unreasonable to have 90-day period to calculate a defined benefit, as the calculations are complicated, and there is a fair amount of paperwork," said Victoria Quesada of Quesada & Moore in West Hempstead.

What's more, she said, the waiting period is tied to Internal Revenue Service regulations and a plan's benefit year.

Under IRS rules for pension plans, Quesada said, a participant's benefit payments begin (unless he/she elects otherwise) no later than the 60th day after the close of the plan year in which the latest of the following events occur: (1) the date the participant reaches age 65 (or an earlier normal retirement age under the plan); (2) the date the participant reaches the 10th anniversary of participation in their plan; (3) the date the participant terminates his/or service.

"All qualified plans will contain the foregoing language," she said. "These are the minimum requirements."

Many plans will not make the participants wait until the end of the plan year, and many pay benefits before normal retirement age, Quesada notes. The summary-plan description should contain information about the earliest date a participant can begin receiving pension payments, she said.

DEAR CARRIE: While looking at my last pay stub, I noticed that my employer hadn't made any deductions for my 401(k). I asked the accounting department, and it informed me that it hadn't been deducting 401(k) amounts from my checks for about nine months. Apparently when my employer changed payroll companies, an error was made. I know that I should study my stubs more closely, but do I have any recourse against my company?

- 401(k) Not OKDEAR 401(k):You are the victim of sloppy bookkeeping but not much beyond that.

And errors in such deductions aren't uncommon.

"Unfortunately, errors in retirement-plan administration do happen," an IRS spokeswoman said. "The good news is that retirement-plan errors can be corrected through the Employee Plans Compliance Resolution System, which helps employers protect participant benefits and keep their plans within the requirements of the Internal Revenue Code," she said.

So what should you do? Ask your employer if the company is working with the plan administrator to make the appropriate corrections, the spokeswoman said. If your employer does not know how to start the process, the company can visit irs.gov and review the "Correcting Plan Errors" information in the retirement plans community section, the spokeswoman said.

For information and forms on correcting pension-plan errors, go to:

http://www.irs.gov/retirement/article/0,,id=214894,00.html;

For information on pension rights, go to

http://www.dol.gov/ebsa/Publications/10common.html