## Facts

- Warren Lorenzen worked for Sperry & Hutchinson for about 37 years and participated in the company retirement plan.
- He became eligible for normal retirement on February 1, 1987, but postponed retirement to June 30, 1987 at the employer’s request.
- The plan offered benefit forms including a joint-and-survivor annuity and a lump-sum payment equal to the actuarial equivalent of accrued benefits as of the postponed retirement date.
- To elect the lump sum, the employer required Warren to consult a tax accountant and obtain his wife Delvina’s written consent waiving the survivor annuity; she signed the provided consent form.
- The plan’s summary described a preretirement death benefit: if a participant elected the lump-sum option and died after age 55 but before retirement, the spouse/beneficiary would receive 40% of the lump sum.
- About two weeks before the postponed retirement date, Warren suffered cardiac arrest and died on June 27, 1987.
- The plan administrator informed Delvina she was entitled only to the preretirement death benefit (about $89,000), not the full lump sum (about $192,000).
- Delvina sued, alleging ERISA fiduciary breach based on misleading or incomplete disclosure about the consequences of the lump-sum election if Warren died before the postponed retirement date.

## Issues

1. Whether ERISA requires a summary plan description to address unusual timing contingencies so comprehensively that failure to do so constitutes a fiduciary breach.
2. Whether ERISA fiduciaries have a general duty to provide individualized warnings or advice about risks associated with a participant’s benefit election.
3. Whether a beneficiary may obtain monetary relief for fiduciary breach under ERISA § 502(a)(3) as “appropriate equitable relief.”
4. Whether prejudgment interest should be awarded as part of equitable relief in this setting.

## Decision

- The Seventh Circuit held ERISA requires an accurate, sufficiently clear summary plan description, but not one that anticipates every atypical contingency.
- The court rejected the view that ERISA generally obligates plan fiduciaries to act as individualized financial counselors providing personalized warnings about election consequences.
- The court found the plan’s summary materials misleading in failing to clearly explain that, after a lump-sum election and waiver of the survivor annuity, death before the postponed retirement date would yield only the 40% preretirement death benefit.
- The court ruled that monetary relief may be available as equitable relief for fiduciary breach under ERISA § 502(a)(3).
- The court reversed the district court’s award of the full lump sum and limited recovery to the plan’s preretirement death benefit (40% of the lump sum).
- The court denied prejudgment interest.

## Legal Principles

- ERISA requires summary plan descriptions to be accurate and understandable to the average plan participant, but not to catalog every uncommon timing scenario that could affect benefits.
- A fiduciary breaches ERISA when plan communications are materially misleading, including when related provisions are presented without clear reconciliation in a way likely to mislead an average participant.
- ERISA does not impose a general duty on plan fiduciaries to provide individualized counseling or warnings about the advisability of benefit elections.
- Under ERISA § 502(a)(3), “appropriate equitable relief” for fiduciary breach can include a monetary award, but the remedy must be tailored and generally consistent with the plan’s structure rather than a judicial rewriting of benefits.
- Prejudgment interest in ERISA fiduciary-breach cases is discretionary and depends on equitable considerations.

## Conclusion

The Seventh Circuit held that misleading plan summaries can support equitable monetary relief under ERISA, but ERISA does not require personalized counseling and does not justify rewriting plan benefits; the widow’s recovery was limited to the plan’s 40% preretirement death benefit, without prejudgment interest.


Lorenzen v. Emps. Ret. Plan of the Sperry & Hutchinson Co., 896 F.2d 228 (7th Cir. 1990)