Employer Stalling on my Lump Sum Distrubution HELP!

[GBurns]

I would question the prudence of any fiduciary who allows a plan to operate with account values/balances that were not "rationalizable" and which do not reflect fair or reasonable market value (or close). If the fiduciary has to wait for a valuation in this circumstance before making any distribution, it seems that the account balances do not reflect fair value.

[RTK]

Interesting.

I recognize that the issues mentioned (vesting, partial termination, overvalued or undervalued assets, late contributions, testing and allocations) are important. But they would have to be dealt with in any case, regardless of a plan termination. I think that what happens is that these issues are often only closely reviewed at plan termination. If there are such issues, it would be better to delay the plan termination while the issues are resolved.

In my experience, the only significant issues I have encountered with the IRS upon a DL application filed in connection with a plan termination are the vesting and partial termination issues (and I once spent more time on preparing an explanation for the DL application on why a partial termination had not occured than I did on the entire DL application). It may be that I have just been lucky.

For whatever it is worth then, I think it is better to advise plan administrators to make distributions due under plan terms in the case of a plan termination. Of course, there has to be some flexibility based on an evaluation of the plan and issues, but as a general rule, I think that the regularly due distributions should be made. If there is some question about the amount of the regularly due distribution, I can see delaying the distribution, but not because of the plan termination or for the period of the IRS review of a DL application upon plan termination.

[Guest stevena1]

As a side note, let me add that there are some providers (Hartford being one I am sure of) that when they are informed that a plan has terminated, will "freeze" any distributions until they have directions for every participant in the plan.

Wrong or right, they wont process ANY distributions for a terminated plan until they have ALL forms for everyone....so this could be another delay.

Also, there are providers that will not issue individual checks or wires, they send everything to the sponsor in case of a plan term (I THINK Nationwide)...so if you dont have all your forms in for everyone, you certainly would not want a pool of money sitting there....another possible reason.

We have lots of plan terms that hold distributions, and for various reasons....

[RTK]

I guess that would make them the fiduciary for those distributions.

[Bird]

I agree with RTK 100%.

As for this...

Also, there are providers that will not issue individual checks or wires, they send everything to the sponsor in case of a plan term (I THINK Nationwide)

I think NW puts a hold on all distributions if the plan is term'd, but that's only to make sure that CDSCs are paid properly. They do process distributions. It's John Hancock that wants to send the money to the sponsor (or charge some exhorbitant amount to do what they should be doing anyway).

[Guest stevena1]

Thats right...Hancock. I knew somebody did it.