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Guest jhall

SSA Notice of Potential Private Pension Benefit Information

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Guest jhall

Does anyone have any experience with responding to former employees who have received a Potential Private Pension Benefit Information Notice from the Social Security Administration (Form SSA-L99-C1). I searched the boards but could not find any prior discussions on these notices.

We have a client that acquired a company in the late 90s and, following the acquisition, merged the seller's 401(k) plan into the buyer's 401(k) plan. The Seller apparently had a defined benefit pension plan prior to adopting the 401(k) that eventually got merged. Nobody at current company really knows anything about that old DB plan but understanding was that it was terminated and benefits annuitized or distributed in some fashion well before the current company appeared on the scene.

Wife of former employee with seller back in mid-70s recently received an SSA Notice indicating that she MAY be entitled to potential pension benefits based on information reported to SSA in 1977 (notice indicates potential life annuity in the amount of $22 to be paid monthly).

We suspect the amounts under the old plan have already been paid out to the former employee but, not having any involvement with the termination of the old DB plan or really knowing circumstances of the termination, etc., we would like to be able to provide a helpful response to the wife or point her in direction for seeking additional information that would let us confirm there are no amounts still due.

We can try and ask some other older employees if they recall what happened with the pension plan benefits, etc. but they are apparently few and far between. Would the IRS or PBGC be able to provide any additional information? We have already checked PBGC website of missing participants and neither individual or any others from old company seem to show up there.

Would appreciate any suggestions for being able to provide a helpful response that would let company close this issue. Thanks.

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If Plan was subject to PBGC coverage, than sponsor would have filed form PBGC 500 and EA would have signed EAS. So, you may be able to identify EA who may help. Also, should have filed Form 501 post-distribution which will tell you if annuities were purchased. Problem could have been that annuities purchased before Plan termination and then would not have been reported on 501. You may be able to get prior 5500s through "Free Erisa" (which won't be for free) to see if annuities were purchased. In such case, you may be able to identify insurer.

You mentioned wife, which suggests widow. It may be that husband died and no death benefit is payable. You would need to obtain date of death of participant and plan document in effect in 1976/77 to see if death benefit available.

Yes, always prudent as part of plan termination process to complete Form SSA for those former deferred vesteds to received a distribution.

Finally, I don't know about the legal aspects of this but I believe the onus would not be on the wife to demonstrate anything about entitlement and distribution. So, tread lightly as you may end up incurring more costs than coming to a settlement. After all, she has produced a document that shows an entitlement.

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I'd send the client digging thru the files. Any boxes of benefits related documents from the acquired company. Any employee benefit / HR files of acquired employees (if not lucky enough to have that specific employee, maybe some clues can be found in others who were acquired). Maybe look in any boxes w/ tax filings to see if 5500 related documents might have been filed there.

Next step would be as Andy suggested about PBGC and Free Erisa for evidence of plan termination and any clues to disposition of assets.

Then if the client doesn't find anything, they can tell the person "we looked but didn't find anything to make us believe the benefit was not paid out at or before the plan termination". I usually added some words in denial letters like this about "one of the jobs of the SSA is to help workers keep track of benefits at former employers, because the SSA didn't previously require plans to report when benefits were paid out some of the records at SSA are inaccurate, this results in some people such as yourself getting notices about benefits that are no longer valid".

I worked at a large oil company that has acquired/predecessor plans. While not routine, I did have my share of SSA notices about long past reported benefits. I never had anyone fight as long as we could honestly say we dug out all the boxes and files and looked as best we could. I remember some even saying after the fact "well I didn't think there was anything there still but wanted to make sure since I got this notice".

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The Seller apparently had a defined benefit pension plan prior to adopting the 401(k) that eventually got merged. Nobody at current company really knows anything about that old DB plan but understanding was that it was terminated and benefits annuitized or distributed in some fashion well before the current company appeared on the scene.

Since merger and termination are vastly different animals, the suggestion to go "digging thru the files" is essential. Very important to identify the big picture first: merger or termination. Then, if a termination, what type of payments: annuity purchase or cash distributions (either is possible with a merger, but less likely).

If no distribution or annuity purchase, don't forget to check the files for evidence of outstanding QDROs.

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Guest jhall
The Seller apparently had a defined benefit pension plan prior to adopting the 401(k) that eventually got merged. Nobody at current company really knows anything about that old DB plan but understanding was that it was terminated and benefits annuitized or distributed in some fashion well before the current company appeared on the scene.

Since merger and termination are vastly different animals, the suggestion to go "digging thru the files" is essential. Very important to identify the big picture first: merger or termination. Then, if a termination, what type of payments: annuity purchase or cash distributions (either is possible with a merger, but less likely).

If no distribution or annuity purchase, don't forget to check the files for evidence of outstanding QDROs.

Thanks for all the suggestions so far. Just for clarification, understanding was that old DB plan was definitiely terminated. It was Seller's 401(k) plan (apparently replacement to terminated DB plan) that eventually got merged with Buyer's 401(k) plan. They have info on the old 401(k) plan but this individual was apparently never part of that 401(k) plan.

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If the last 5500 included a Schedule H (large plans), that schedule has separate lines for "benefits paid directly to participants" and "paid to insurance companies on behalf of participants". See Line 2e. Alternatively for small plans, the Schedule I does not make such distinction. So, back to "digging thru the files".

Thus, size matters. :lol:

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Guest Kabert

I've done letters for clients in this situation in the past and never has a client had the alleged participant or beneficiary complain further. I think, as was suggested, make it sound as though you really tried in the letter. Set out the exact dates of employment, job titles, when he commenced participation, when employment terminated. Describe any other history you can dig up. Then, say that everything points to his benefit being cashed out in approximately x year. That, when the plan was later merged or whatever, his name wasn't on the participant rolls, etc. By the way, you mentioned a monthly benefit of $22 (at age 65). If this worked out to being under the cash-out limit back then, then that'd be a likely reason for no more benefit.

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There is an issue of professional ethics. The goal should not be to blow off the spouse and if due dilgence doesn't uncover that a distribution was reasonably made, another course of action should be followed. Since a deferred vested participant is generally reported on SSA in the year following a service break, while possibly the case, it does not follow that the participant would be listed if a cashout occurred.

All this said, there is the balance of how much your client wants to spend in the sake of truth for a benefit that may have a lump sum value of a couple thousand dollars. It's truly your client's call and all you can do is aprise him of the due diligence that should be expended and then it is the client's decision. Again, you can seek the cooperation of the inquirer but the onus should not be on her to demonstrate that she didn't receive the notice in error. Then, again, it's not my money.

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This is the reason that follow up reporting on participants who take full distribution is now mandatory. The SSA is tired of getting grief for all the "false positives" that their bad records create. We're not being callous or blowing off the spouse. We're saying that if all the evidence suggests that no benefit remains with the company and after the company makes an effort to search their records, then it's reasonable to conclude that this is another "false positive". If we didn't know for fact that this is a common problem, then it would be a different situation entirely.

One important piece of evidence that no benefit remains is that it's a terminated plan. The due diligence is for the company to look for evidence whether annuities were purchased and then contact that vendor. If the company can't find anything proving annuities were purchased, and if they don't find anything to show something irregular happened w/ this specific employee, then they stop there because the proof of distribution is the termination of the plan. (Which is why you suggested and I agreed that they should take some basic steps to verify the plan termination.)

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I am one of those people who recd form SSA-L99-C1 and came to this site to find helpful information.  It appears Masteff works for Social Security and reaffirms the mindset of lame people working in our government and why the public has such a low level of confidence or respect in public servants. 

It looks like Andy the Actuary is trying to be helpful, but at the end of the day we have to go through people like Masteff.  No help found here but it sure has been insightful. 

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If the plan terminated and the person had not already been paid out, then there should be a strong presumption that either an annuity was purchased for the person or the person was paid out then.  Under a plan termination, all benefits must be distributed in one of those two ways.

Masteff was not being unreasonable in pointing out that it is required that all new terminations with deferred benefits must be reported to the Social Security Administration but until recently, there was no obligation to report that people who had been reported previously had been paid out.  There is a problem that many of the people of the SSA database are not, in any way, entitled to benefits, and (in the earlier situation) if one is a couple of companies removed from a defined benefit plan that terminated many years ago, the current company may in fact have absolutely no access to relevant records for a plan that had been fully discharged.  How can they avoid having to pay for something that they have no ethical or moral responsibility for?

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