Broker makes distribution w/o authorization...

[chris]

Employee terminates employment 12/31/04. Anniversary date of PSP is 6/30. Plan says terminated participant's account balance will be distributed as soon as administratively feasible after anniversary date coinciding with or next following date of termination of employment. Broker was notified in writing that no distributions were to be made without authorization from Plan trustees. Terminated participant talks to broker and broker distributes 10K out of terminated participant's account in March 2005 without communicating with trustees. From the dollar perspective there won't be a problem b/c participant's account balance is sizeable enough that the early distribution of the 10K won't create an issue of trying to get money back from the participant. However, it seems there is an operational defect as well as a reporting problem that has to be dealt with. Not only has the distribution been made prior to the distribution date in the PSP, but now distributions will be in two different Plan years. Also, the Plan only allows for one lump sum payment. I understand from the accountant that the coding on the distribution will be an issue. It won't work out the immediate issues but would an indemnification/hold harmless type agreement from the broker and possibly the participant as well suffice as to the consequences of the operational issues? Need some suggestions.... Thanks.

[Guest HockeyMom]

Fire the broker.