david rigby

You stated merger, so no, it's not a termination. The question of "downside" could be more complex, which is a question for the consulting actuary. Point of clarification, the term "non-active" can be ambiguous. You might mean (a) "frozen", or (b) "only in-pay status or VT participants" or (c) maybe even something else. (That clarification probably won't have any bearing on how you merge the plans.)

4. One more time, remind the sponsor of their responsibility and the penalties for failure to meet compliance parameters. AND resign. Now.

@Peter Gulia, I have recently learned, due to my own POA status, that some states (including my own NC) limit any POA document by requiring the POA to explicitly state the agent is permitted to do certain things; if not explicitly included, then such action is forbidden. Example1, the agent may not change an existing beneficiary designation unless the POA document expressly grants such authority. Example2, the agent may not delegate his/her POA authority unless the POA document expressly grants such authority. Does your statement above posit that a plan/PA may accept a POA document issued under a state statute without determining if any state POA limitations apply?

The answer might depend on who is "We". If you are the plan/plan sponsor attorney, then the PA can express an opinion but ultimately should defer to legal advice. That sounds like a great summary: the attorney gets to decide.

Also, look for something like "per stirpes".

I'm not sure you (or the plan) cares what is in the divorce order. Look to the DRO (that hopes to become a QDRO) for any "instructions". I see a recipe for error if the attorney and/or the DRO expect the plan to use some "implied" standards or procedures.

Nope. Decline. There is a reason for the referral, and it's probably a deeper problem than you know.

IMHO, yes. However, that does not automatically mean the resulting DRO will be qualified by the PA. Just an opinion.

Before doing that (he said, not knowing if such action is legit), one might try a gentler approach. One might "suggest" to the participant that escheat might happen, thus making it even more difficult for him/her to get the money. Such communication might be more effective if the PA enlists the assistance of some other party (sibling perhaps?) that is more effective in getting the point across. Such communication will likely emphasize the above facts: (1) each payment has already been reported to the IRS, and (2) each payment is already taxable income (along with the corollary fact that the IRS "frowns upon" the avoidance of paying taxes and the avoidance of filing or declaring taxable income). Also, such gentle communication might suggest that the participant can get all of the (remaining) money via direct rollover to an IRA. (Taxation might not change since the IRA must also do an RMD.)

In what way has the Plan failed to "get them their money"? From your post, it appears the RMD has been paid and the 1099-R has been provided, but the participant has failed to cash the checks. Is it the responsibility of the Plan or trustee to force a participant to cash the check? Perhaps a gentle reminder that the cashing of a check is not what alerts "the government", but it's the filing of the 1099 form, and he/she has taxable income?

Has the DRO been qualified (ie, approved) by the plan sponsor? I'm skeptical that the plan can provide some retroactive payment in this case. BTW, your second sentence might be backwards: most DB plans pay from plan assets rather than from annuity contracts.

I'm not sure this young man has considered other alternatives. If available, he should discuss the situation with a local Senior Services agency, maybe also with an elder-law attorney.

Agree with @C. B. Zeller. However, who messed up? Was it your responsibility to prepare the QDRO? Ex's responsibility? Was it done and delivered to the plan sponsor? Maybe there is someone with fault other than you? Based on your mention of $34K, it may be most efficient to solve this without additional legal fees.

Your "thinking" and any opinions here are probably not the best source of information. 😄 Does the plan allow anything like a "return"? Does the plan accept a rollover from any other source?

Get a study partner.