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Application of Retirement Plan Benefits Garnishments

A participant in an ERISA-covered qualified retirement plan was convicted of conspiracy to defraud the federal government through a mortgage scheme and ordered to pay $800,000 restitution. The qualified retirement plan in which he was invested asserted that garnishment was prohibited according to anti-alienation provisions under ERISA prohibiting the transfer or assignment of retirement plan benefits. The government responded that an exception to such provisions is not applicable based on the Mandatory Victims
Restitution Act (MVRA).

The MVRA allows the government to impose a fine against all property to enforce a judgment, with the exception of property that cannot be accessed for unpaid federal income taxes. As ERISA-covered retirement plan assets can be accessed to pay unpaid federal income taxes, they also can be accessed under the MVRA to pay criminal fines. The court upheld the government’s stance.

EBIA weekly; July 9, 2015.