Former New London finance director to challenge city for reclaiming retirement money

New London - The city has removed about $29,000 from the former finance director's retirement account more than six months after he left the position, saying he is not entitled to the matching contribution from the municipality.

James Lathrop, who was hired by the city in 2008 and left last summer to become the finance director in Westerly, said he was never notified that the city was taking the money. He said he checked his 401 savings account in January and discovered the discrepancy.

"I have two problems,'' Lathrop said Thursday. "One, that they took it, and two, the manner in which they took it."

Lathrop said he believes he is entitled to the match that the city gives to employees who put money into their 401 retirement accounts. City employees may contribute up to 7 percent of their earnings to their account; the city matches 9 percent.

Personnel Director Bernadette Welch, who also serves as retirement funds coordinator, confirmed Thursday that the city took back the municipality's contribution plus the accrued interest on that portion of the balance.

Welch said Lathrop worked for New London for less than five years and that unaffiliated workers, which is what Lathrop was as the director of the finance department, must work for five years before they can receive the 401 match benefit. She said there are different rules for different employees, depending on whether a person is in a union and whether their status is full-time, temporary, or other.

Lathrop said he was told by two former city managers that he was eligible to receive the matching funds. He said he's taking his case to the City Council Monday night.

"I wish the best for the city,'' he said Thursday. "But this has a direct impact on me and my family."

Welch wrote in an email to The Day Thursday that, as finance director, Lathrop "was well aware that he had five year vesting,'' meaning he would be not eligible to collect the matching funds until he had worked for the city for five years.

She explained why Lathrop was not notified that the money was being withdrawn from his account: "He had been instrumental in assisting the (former) City Manager with approaching the council regarding changing the vesting, so it was clear to Personnel that he understood he would not have access to the city funds once he separated ... It would have seemed insulting to remind him that the funds were not vested and would eventually have to be removed."

A contentious email exchange Thursday between Lathrop and Welch included personal attacks and sarcastic responses.

"Personnel has a history of seeking revenge, undermining employees, and taking actions without informing the proper individuals,'' Lathrop wrote to Welch. "While I hope this was just an error, I have my concerns."

"Thank you so much for your kind comments, Jim,'' Welch responded.

After Welch's explanation about vesting policies, Lathrop asked whether her email was the city's official response.

"... maybe you should stop corresponding,'' Lathrop shot back when Welch confirmed it was the city's response. "You may want to talk to the City's risk manager and understand the potential liability you are creating for the City."

"... I realize you are disappointed," Welch responded. "But striking out at me will not change the fact that I am bound by the terms of the Plan document.''

k.edgecomb@theday.com