Blogging Employee Benefits

March 24, 2006

Garnishment for Criminal Restitution Order

Filed under: Litigation — Fuguerre @ 6:20 pm

ERISA does not prohibit garnishment of a qualified pension plan to collect a criminal restitution order, according to a divided 9th Circuit ruling reversing a district court decision. [U.S. v. Raymond P. Novak, No. 04-55838] The appellate court determined that the Mandatory Victims Restitution Act of 1996 (MVRA) in conjunction with 18 U.S.C. §3613 constitutes a statutory exception to ERISA’s anti-alienation rule, finding that (a) the MVRA is a specific collection statute providing victims with restitution of property loss, and (b) Congress provided for restitution orders to have the same enforcement power as tax liens, for which ERISA plan benefits may be garnished. In contrast with previous 9th precedent, which had found no equitable exception to ERISA’s anti-alienation rule, the MVRA’s specific provisions permit garnishment.

Dissenting opinion pointed to a narrow exception in ERISA’s anti-alienation rule for crimes against the pension plan itself, but failed to find such an explicit directive under the MVRA.

1 Comment »

  1. See commentary and links to previous related developments at Benefitsblog.

    Comment by Fuguerre — March 28, 2006 @ 5:58 am

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