My 2 cents

Your sentence beginning with "I'd just be very hesitant...", you forgot to include the phrase "and correct" immediately after "explain or discover". Anything short of a full correction is inadequate, and really does call for bringing the DOL in. Let it not be forgotten that taking money from 401(k) deferrals is never justifiable, even if the alternative is for the company to have to close!

Even if the company cannot make good on attempts at recovery, the owners could perhaps find a way (especially if doing so would avoid, or at least reduce, jail time for them).

I may be wrong about this, but wouldn't the technical legal term for the employer's actions be "grand larceny"? Assuming (rightly or wrongly) that continued employment by a company that does this sort of thing is not necessarily an unalloyed blessing, it could be that the best course of action would be to promptly contact the Department of Labor. I am sure that they would be nearly as upset as you about it if your suspicions are true. The DOL would be a good place to start.

Presuming that no specific investments are built into the models from which the participant is choosing, I would think that it is still education. If, however, the model matching their answers consists of specific stocks, bonds, or funds, then it might have moved over to investment advice. I think the idea might be that if you stick to saying what kinds of investments would meet the the risk tolerance and goals without suggesting specific investments, it ought not to be considered fiduciary in nature. I think the whole idea behind the distinction is that the investment professional should not be in a position where they can steer the participant into one investment rather than another based on how lucrative the investment is from the investment professional's point of view, since that makes it too easy for their to be a conflict of interest.

Oh - it's a reference to the big circle initials in the new format! I get it now. Thanks!

I'm sorry, but even looking at the original discussion thread, I don't understand what this post is about. I don't see anything here about political parties. What am I missing?

Sure, in a perfect world, but that does not appear to be the situation as described in the original post!

Not a lawyer, but I would put my money on the requirement being what it is (i.e., current address for the AP) is because in so many of these cases, the "last known address" for the AP would be the same as the participant's (they were married, after all), but the circumstances having changed (due to divorce), it ought to be presumed that the AP is not living there any more. Just saying.

...and had the AP been given prompt notice and immediately asked for a payout, it still would surely have taken a period of time to execute those instructions (particularly for a freshly approved QDRO) and the market would have gone down anyway before the assets could have been liquidated. I am not a lawyer, but no relief would have been likely, since the assets could have gone up as easily as down. Hindsight should not be admissible at trial if it comes to that.

I am not a lawyer, but the starting point would probably be finding out what the QDRO provides to the ex and what remains for your husband. To the extent that some of your husband's benefits are given to the ex by the QDRO, there is probably nothing you can do about it. The ex has rights that are spelled out in the QDRO. If your husband is still earning benefits, the newly-earned benefits are probably not assigned to the ex along with any previously earned benefits not belonging to the ex.

From ESOP Guy's post: "You might want to try some informal ways to reach out to the deceased spouse." Do they still do seances? I assume you meant "...to the deceased's spouse." The idea of people not cooperating in receiving money to which they are entitled would be unthinkable but for Nigerian officials looking for people with larceny in their hearts and brains in neutral!

A number of years ago, the New Yorker printed a cartoon by Roz Chast that showed a consumer advocate columnist's response to several questions, generally recommending litigation. Thinking of the financial institution who will not release the funds they are holding, I just quote the following piece of advice given in that cartoon: "This is what's known as an open-and-shut case. If you don't sue them, I will."

My guess is that when the investment professional starts pointing the participant towards specific investments based on the risk tolerance profile, it moves from education to giving actual advice.

Not a tax expert, but if someone surrenders a normal cash value life insurance policy for more than the sum of the premiums, wouldn't the excess be a taxable gain? Why would it be different for a long-term care policy being surrendered for cash? Company X is in process of liquidation and they are offering money (whose money?) to their long term care policyholders in excess of the premiums received? Really?

Too bad the hardship rules don't call for the payment to go directly from the plan to the party owed the money necessitating the hardship withdrawal (but that would violate the no assignment/alienation rules, wouldn't it?). I don't want to be casting aspersions, but what are these people thinking, spending the money on something other than preventing eviction? Outside possibility that might make things look better: Suppose the hardship was requested for reason #1 but expenses arose that would qualify for hardship under reason #2. For example, the money was taken out to prevent eviction but is needed even more desperately for emergency medical treatment. In such a circumstance, it would seem to be acceptable to allow a second hardship withdrawal.

Probably nowhere. Just don't come a-knockin' later looking for another hardship withdrawal to pay the same bill. That's the way I think it ought to be. Where does it say that once a hardship withdrawal is made to cover a qualifying expense but it is not used to make that payment, then they can take another hardship withdrawal? 401(k) plans aren't Christmas Clubs, after all.

For what it's worth, I continue to hold to the views I expressed 4 years ago in a discussion thread here on 401(a)(26) and frozen defined benefit plans. Hard frozen defined benefit plans will seldom need to take action under 401(a)(26), whatever happens to the employer's demographics. The only part of the 401(a)(26) regulations that can matter for a hard frozen defined benefit plan is passing the prior benefit structure test. Such plans are (according to my understanding) entirely exempt from the 40% of non-excludible employees or 50 people requirement under those regulations.

I don't work with things like hardship withdrawals and I don't know the rules, but it seems to me that the regulations MUST allow (if not require!) you to refuse to give a hardship withdrawal for specific medical expenses for which a hardship withdrawal has already been given. That the participant failed to use those funds for the purpose for which they were paid is the participant's problem, and should not be yours.

Isn't there another ongoing thread, concerning someone who took a hardship withdrawal to buy a house but the sale fell through, coming to the conclusion that it cannot be returned, end of discussion. So in this instance, where no sufficient reason was given for a hardship withdrawal but it was granted anyway, how could allowing the proceeds to be returned to the plan be an acceptable course of action?

All other things being equal, using an investment advisor who is tight with the CEO and who, for six figures per year, invests exclusively in individual stock shares, does not usually result in reasonable expense charges, even if one is lucky enough to get presentable rates of return almost as good as index funds.

Has anyone ever heard of an instance where saying "I told you so!" made things better?

Commenting on the 2nd paragraph above - wouldn't having the sponsor making all the investment decisions concerning the 401(k) assets be much riskier, from a fiduciary responsibility standpoint, than allowing the participants to direct the investments? And please, don't get me started on the possible violations involved when the CEO and the investment advisors are "very tight" and the investment advisors are pulling in six-figure fees! Commenting on the last paragraph above - all individual stocks, eh? How much does that cost as a percentage of the invested assets? Wait until the lawyers suing all those colleges hear about this one!

Looks as though more than 60% of the plans over 1,000 participants are entirely participant-directed with another handful partially participant-directed. Below 1,000 tends more toward non-participant-directed.

Knowing no real facts on the subject, to get the ball rolling I would guess something like 80% participant directed 20% trustee directed. Why would any sane trustee want the entire fiduciary burden of making investment decisions to rest on his or her shoulders? It is, after all, 2017, not 1995!

Seems to me that being able to show that they pointed out deficiencies in the hardship request to the sponsor and the sponsor told them to pay it anyway ought to be a pretty airtight defense for the RK. What would it matter if the sponsor still considered the RK at fault? If a sponsor like that goes to a different recordkeeper, the RK will still be able to stay in business with its head held high, since their procedures are sound.