In National Labor Relations Board v. HH3 Trucking, Inc., Nos. 05-1362, 05-4075 (7th Cir. 2014), the issue arose as to whether money received from a pension plan covered by ERISA-which the money at issue was- is forever free of all legal claims by third parties.
In analyzing this issue, the Seventh Circuit Court of Appeals (the “Court”) note that Section 206(d)(1) of ERISA provides that each pension plan shall provide that benefits provided under the plan may not be assigned or alienated. The Court further noted that in Guidry v. Sheet Metal Workers National Pension Fund, the Supreme Court held that a constructive trust on benefits, under which the pension plan must pay someone other than the plan’s participant, violates this rule, even when the trust would be a remedy for the participant’s violation of some other part of ERISA.
However, the Court continued, Section 206(d)(1), and the Supreme Court’s decision in Guidry, concern assets in a plan’s hands. The Tenth Circuit (from which Guidry originated) later concluded that §206(d)(1) does not prohibit the attachment or garnishment of funds after the plan had distributed them to the retiree. Five other circuit courts of appeals (1st, 2nd, 3rd ,6th, and 9th circuits) have agreed with the Tenth Circuit. The Court concluded that it agrees with the majority of the circuits, so that money loses its anti-alienation/ anti-assignment or protection after it leaves the plan.