Court Opinion

ID: 9480445
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:48:15.231198+00
Date Added: 2024-06-11T17:47:41.526181
License: Public Domain

DAVID A. NELSON, Circuit Judge,
concurring.
In its brief on appeal, the defendant bank says that it “disputes Plaintiffs’ contention that the transfer of the assets in two different calendar years resulted in ... the loss of any income tax deferral status.” This issue has not been briefed, and the rules on tax-free rollovers are complex enough to suggest that it would be unwise for us to try to make sense of them on our own. I assume that on remand the parties will have an opportunity to explain their respective positions on the actual tax consequences of any multi-year distributions that may have occurred. (Each of Dr. Warren’s retirement plans stands alone, presumably, and one cannot be certain, from the amended complaint, that assets from any individual plan were transferred in more than one year.)
If the plaintiffs succeed in showing that tax-free rollovers can only be accomplished in a single calendar year, and if it turns out that multi-year transfers were made from individual plans, I take it that a number of essentially factual issues are likely to be presented. The plaintiffs allege, for example, that the bank had a fiduciary duty to administer the retirement plans “competently;” do reasonably careful trustees in fact make it their business to minimize the exposure of plan beneficiaries to taxation? When he decided to withdraw from the plans, did Dr. Warren in fact notify the bank of an election to take “a single lump-sum payment” from each plan? Did the instruments creating the trusts, or any other plan documents to which the bank was a party, specify that all income earned to the date of transfer would have to be paid simultaneously with the payment of principal? Did the bank really delay the transfer of portions of the trust assets in order, as the amended complaint alleges, “to continue generating fees for its management,” or was there a more benign explanation? And if there was a breach of duty that made it necessary for the Warrens to pay $87,205 in taxes sooner than they would have otherwise have had to, and if it did in fact cause an acceleration of the time when they would lose the benefit of a tax-deferred compounding of the income on $168,-094, what was the present value of the advantages which they lost? Without knowing the answers to these and similar questions, we cannot say whether all or any part of the damages sought by Dr. Warren are recoverable.
I concur in the judgment that the bank failed to show that it was entitled to a dismissal of the case for failure of the amended complaint to state a claim upon which relief could be granted. I have written separately merely to suggest that the questions remaining to be decided may *984prove to have a much broader sweep than the narrow question that is before us now.