Janie

Wife was mislead to believe that once the 401K account was changed into her name that she owned it as her own. But, we now find out that as long as it is in the 401K plan, she will be treated as a beneficiary. And they are making her take the RMD for 2017 calculated as a beneficiary and not as a surviving spouse . She has been told that even if she rolls it over to an IRA of her own, she will be required to use the beneficiary table (single life) verses the Uniform Lifetime table because she has taken a RMD as a beneficiary. Ever heard of this?

Husband died in 2016 at age 76. Made RMD in 2016 after death; Wife stayed in 401K plan but just had name changed from husband to wife (Age 72 at time of husbands death.) Thought the transfer in wifes name would allow wife to continue to use the Uniform Life Table since wife was only beneficiary. Principal Group handles the Plan and they are insisting that wife must take it using Single Life Expectancy. I have been trying to get someone to listen to me that the Uniform Life Table should be used. It appears that once the first RMD has been made as a “beneficiary” vs. surviving spouse, the wife will be stuck with the single life expectancy which is undesirable in this situation. It appears that wife has no choice in 2017 RMD. If the 401K is rolled over to an IRA, what table will be used in the IRA and can the IRA be treated as “wifes own”? Please help….I am not a professional…just a fan of the website.

We recently discovered an error in previous software that resulted in a few participants not being recognized as eligible for defined benefit plan benefits. They were never reported on SSA or 8955-SSA. Should we report them in this years 8955-SSA??? And is there anything else we should do?

Yes, the SPD did indicate that he could retire early at 62. However, it was worded as if there would be a early retirement penalty. However, the plan allows 100% vesting with no reduction at age 62 under his circumstances. The SPD wording has been changed since then to make it more clear; but he did not receive the updated SPD and thought he was would be subject to a reduction in benefits if he retired early.

Is this a breach of fiduciary duty and should we comply with his request? The plan indicates that any employee who works over a year (even if the employee has not met the standard 5 year vesting) and terminates employment after age 55 is 100% vested. This employee met this requirement. However, the employee was somehow “lost” in the defined benefit plan recordkeeping system and never recognized as being vested. The employee was given a Summary Plan Description when he was originally hired. However, NO notices were ever mailed to him at termination or periodically. He was not mailed a Deferred Vested Pension Notice at termination; He was not reported on the annual Schedule SSA in the year of termination; He was not updated with a SPD when the plan was modified; He was never mailed a SPD during the 10 years between his termination and age 65; He was never provided an annual notice. It is not a matter of a “lost” participant as his mailing address and phone number remained the same throughout all these years. Three months before his 65th birthday, he contacted the plan administrator, asking for his paperwork. He was not called back because it was thought that he did not qualify since he did not have 5 years vesting. He later called back again and insisted that he was vested because of ERISA. It was referred to our legal department who said that he was in fact vested due to his age at termination. He has now asked that the benefits be paid from age 62 (which is allowed in the plan without any penalty). A brief letter was mailed to him saying that he would have had to apply before age 62 to get the benefits and that he could only get benefits starting at age 65 but no explanation of how to appeal the decision was in the letter. Since this was apparently a breach of fiduciary duty (although no one has openly admitted this to him), should he be paid the benefits from age 62? And what if we have others who also fall into this category due to our failure to recognize the over 55 rule?