Plan Termination Distributions

[Guest dmitchell]

What can we do if you have a couple of participants who just refuse to get their distribution forms back to you so that you pay them out and be done with the plan termination. We have placed calls to them at home and at work and they want return our phone calls. We are talking about vested amounts over $25,000.

Could we force a distribution? Do a lump sum or roll it into an annuity account. This only being done after we send another letter and telling them of our intent.

Has anyone ever been faced with this? Help..

[Guest b2kates]

As always what does the plan say.

Generally, the normal form of benefit is J&S annuity. If the plan is terminated, then the plan would purchase the annuity for the participant and their spouse.

Advise them that an annuity will be purchased, if they do not make an election otherwise.

since the plan is terminated you are not in a cash out situation.

[david rigby]

I agree. That is exactly what I did in a similar situation. But be careful that you purchase the correct annuity, in form and amount. A variation on this is to inform the participant that you will take this action if you do not receive their completed distribution form within X days.

[Guest asire2002]

If the plan is not subject to J&S, a cash distribution with appropriate withholding, rather than the purchase of an annuity, is also an option. Again, inform the participants in advance what will happen if they don't respond.

[Guest CAM223]

How do you purchase annuity without birth certificates and info on spouse? Do the insurance companies require the participant's signature on the application?

[SoCalActuary]

You should talk with Pete Preovolos about this in more detail. They have given us practical solutions on these problems in the past.

[GBurns]

A birth Certificate and the beneficiary's signature are not required to purchase an annuity or set up an IRA etc.