Court Denies Reimbursement of Losses from 401(k) Withdrawal Delay

In granting summary judgment for Universal Health Services, Inc. (UHS), the court noted that Linda Saylor was not fully retired, but was still employed on an “as needed” basis by the hospital for which she had previously worked full time at the time she first attempted to receive a distribution. In addition, according to the opinion, Saylor did not complete the rollover distribution process per instructions on the distribution form or specify her distribution request as an age 59 ½ distribution until the day before the distribution was processed.

At age 60, Saylor gave notice of her retirement from the hospital, but remained employed on a “per diem” basis. She had received an IRA rollover distribution request form from Fidelity Management Trust Company, UHS’ 401(k) plan administrator, which said she must first open a Fidelity IRA, then call the plan’s toll-free number to initiate the rollover.

Saylor never made the call to initiate the distribution, assuming the rollover would happen automatically. When the rollover did not happen, Saylor called a member of UHS’ benefits office who told her she was not eligible for a retirement distribution because she was still employed on an “as needed” basis. Saylor objected that the distribution “has to do with how old I am,” according to the opinion.

Saylor wrote the hospital a letter of resignation terminating her per diem employment, and a month later, called to initiate the rollover of her account, requesting the withdrawal as an age 59 ½ distribution. Later that year, she requested UHS pay her $4,753 for the decline in her 401(k) account value from the time she first began the distribution process to the time her account balance was actually rolled over.

Her request was denied, and she sued UHS, claiming it improperly delayed the rollover of her account.

The case is Saylor v. Retirement Committee, E.D. Ark., No. 4:05CV138 JLH, 7/25/07.