Joint & Survivor Annuity-Terminated Plan

[BTH]

We have a situation with a small, terminated Money Purchase Plan where there is one remaining participant who refuses to make an affirmative election as to taking her funds. The account balance is over $5,000.

The “normal” form of benefit under the Plan is a Joint and Survivor Annuity, which we told the participant will be purchased absent an election for a rollover/lump sum, etc. The problem is that we cannot find an insurance company (in Pennsylvania), that will set up an annuity without the participant’s signature. Does anyone know of a company that will do this or perhaps accept the Trustee’s signature?

Thanks.

BTH

[KJohnson]

I have had similar problems. I believe that the IRS's response to this question at an ASPA conference in the late 1990's was:

"There is no good answer to this question. It requires a statutory fix..."

That was helpful--right?

[david rigby]

There have been a few discussions on these boards related to purchasing an annuity without participant direction. Try the Search feature.

[QDROphile]

Have you informed the participant the the efforts to solve this problem are being charged to the plan and that his/her account is the only one to bear the costs?

[mbozek]

I dont know if the participant's account can be charged with the admin expense of the plan. The way to distribute the benefit is to make the participant an offer she cant refuse-- offer additional comp to induce her to take a LS distribution. Its cheaper than contining the plan indefinitely. The other idea is to see if the er can purchase a group annuity contract which does not require the participant's signature since it is the er who purchases the contract.

[BTH]

In this situation, I have the impression that the participant cannot get the spousal consent necessary for a lump sum. We are, in fact, charging the plan's administrative expenses to the Plan and since she is the only participant, that ends up being out of her account. We informed her of this many times over the past year and a half and still nothing. I did a search before posting and, as KJohnson pointed out, there doesn't seem to be a good/easy answer to the question!

BTH

[mbozek]

well then the participant will pay for plan admin costs until there are no assets in her account. I hope she is aware of this.

[mbozek]

well then the participant will pay for plan admin costs until there are no assets in her account. I hope she is aware of this.

[Guest b2kates]

...or until her account balance falls below the cash limit.