Terrorism law trumps anti-alienation rights under ERISA

The son of a man killed by a Colombian guerrilla group can obtain money from a 401(k) account connected to the perpetrators, a Massachusetts federal judge ruled, deciding that a terrorism law can trump the anti-alienation rights of a participant under ERISA

Fidelity Investments can turn over 401(k) assets to the victim’s son under the Terrorism Risk Insurance Act of 2002 (TRIA) without violating the federal law protecting retirement plan assets from being used for other purposes (alienation of benefits).

The Court held that since TRIA begins with a “notwithstanding” opening clause, that means it is intended to override any conflicting federal statutes, including the Employee Retirement Income Security Act.

The lawsuit was initiated by Antonio Caballero to execute a judgment against Fuerzas Armadas Revolucionarias de Colombia and Norte de Valle Cartel for the kidnapping, torture, and murder of his father. Caballero asked Fidelity to turn over about $200,000 that is held in connection with these defendants, and Fidelity sought a court ruling on whether it could turn over money held in a 401(k) account without violating ERISA’s anti-alienation rule. The judge ruled that Fidelity could distribute the money to Caballero, but only under the same terms that the owner of the 401(k) account would have been able to access the money.

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