Offsetting Disability Benefits and IRA Roll Overs

September 30, 2017

A recent case out of the 5th Circuit again emphasizes the importance of clear plan language. In this case, the plan’s SPD stated that long-term disability benefits could be offset by a number of factors, including pension plan benefits if the participant elected to receive them. The issue became the phrase “elected to receive them.” The court held that because the pension benefits rolled over into an IRA that the participant did not “receive” them. Therefore, the long-term disability benefits could not be offset by the pension benefits. If your plan rolls pension benefits into an IRA you should review your offsetting language in related plans. For all other plans, this case serves as a reminder of the importance of detailed and clear plan documents.


Thomason v. Metro. Life Ins. Co., No. 16-10634 (5th Cir. July 18, 2017, unpub.)

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