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July 9, 1982

Nazario MORALES, Plaintiff,
PLAXALL, INC., et al., Defendants

The opinion of the court was delivered by: NEAHER


This is an action brought by Nazario Morales, a former employee of defendant Plaxall, Inc. ("Plaxall"), to recover employment benefits allegedly due under defendant's profit sharing plan ("the Plan"), which was established under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. Jurisdiction is based on 29 U.S.C. § 1132(e). The action was tried upon the facts without a jury, and the following constitute the Court's findings of fact and conclusions of law. F.R.Civ.P. 52(a).

 Plaintiff Morales was employed from March 21, 1965 until July 22, 1977 as a mechanic in Plaxall's plastics factory. On the latter date, Morales was discharged, prior to the normal retirement age of 65, after admitting that he had machined two pieces of angle iron for his personal use from materials owned by Plaxall. Both prior and subsequent to his discharge, Morales had inquired of his employer as to his rights under the Plan, which provides for distribution of pension benefits to Plaxall employees. He was advised that an eligible employee was entitled to benefits upon reaching the retirement age or upon disablement. At no time was Morales informed by defendants that he had a right to receive benefits upon termination of employment prior to reaching age 65.

 There is no dispute that on the day of his discharge Morales possessed a 100% vested interest in the Plan, based upon his twelve years employment with Plaxall, nor that he is entitled to full payment of benefits under the Plan together with accrued interest. In fact, all monies claimed by Morales, with the exception of attorney's fees, have been segregated in a trust account bearing his name. The sole issue before the Court concerns the timing of release of these funds, which in turn depends upon a determination as to which version of the Plan governs the distribution of Morales' vested interest.

 The Plan was originally adopted on October 31, 1960. Certain amendments were executed on December 12, 1960, and the Plan was substantially revised on October 31, 1976. Several modifications of the Plan as restated in 1976 were effected during the following year, but the record does not indicate when the latter amendments were properly executed and formally adopted. *fn1" Nevertheless, the Court finds as a matter of fact that the final amendments to the Plan became effective subsequent to the date of Morales' termination.

 The crux of the present controversy arises out of four words which appeared in the Plan as amended in 1976 which were not present in the Plan from 1960 to 1976 nor from the time the 1977 amendments became effective. The four words are "or termination of employment" as they appear in § 6.04 of the 1976 version:

"Time of Payment of Benefits
Payment of benefits shall be made or shall commence, unless the Participant elects otherwise, not later than sixty (60) days after the close of the Plan Year in which occurs the Participant's retirement, death, disability or termination of employment. Such election shall be in writing specifying the benefit and the time payment is to be made." Pl. Exh. 1, § 6.04.

 Thus, unlike any other version of the Plan, the 1976 version provided for early payment of benefits upon a participant's termination prior to the normal retirement age. This version was executed in October 1976 and was formally adopted by the Board of Directors of Plaxall on December 30, 1976 in order to conform the Plan to the participation and vesting requirements of ERISA. It was submitted to the Internal Revenue Service ("IRS") on June 30, 1977, approximately three weeks prior to Morales' termination, to qualify the Plan for certain tax exemptions. The IRS approved the Plan on January 23, 1978; however, the version approved did not contain the "termination of employment" provision, which had been deleted pursuant to a letter dated November 3, 1977 from Plaxall to the IRS. Pl. Exh. 5.

 Defendants argue that the 1976 amendments never had legal effect on the Plan. They contend that Plaxall never intended to include the additional provision in § 6.04, and that it was the product of haste and oversight in the hurried attempt to conform the Plan to ERISA and Internal Revenue Code requirements prior to the June 1977 deadline imposed by the IRS. Further, the 1976 version was drafted by an outside professional pension service corporation and was never published to any employee, including Morales; therefore, defendants argue, it never rose to the level of an offer to a unilateral contract, but instead comprised a mere "draft" for submission to the IRS.

 As a starting point for analysis, it is clear that § 6.04 of the 1976 version of the Plan is consistent with § 206(a) of ERISA, 29 U.S.C. § 1056(a). Section 206(a) protects a participant's right to benefits by establishing age 65 as the latest possible trigger for payment of benefits, leaving the employer free to set an earlier date under its ERISA plan:

"Each pension plan shall provide that unless the participant otherwise elects, the payment of benefits under the plan to the participant shall begin not later than the 60th day after the latest of the close of the plan year in which-
(1) the date on which the participant attains the earlier of age 65 or the normal retirement age specified under the plan,
(2) occurs the 10th anniversary of the year in which the participant commenced ...

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