Termination of 401(k) holding annuities

[sloble@crowleyfleck.com]

Small 401k plan is terminating and its plan sponsor company is dissolving. One participant died recently and the participant's account was used to purchase annuity contracts from an insurance company for the participant's 2 children. The beneficiary designated by participant is a named custodian/trustee and the beneficiary designation specifies that the benefits be used by the custodian/trustee 50/50 for his two kids. The purchase of the annuities is consistent with the plan terms and the beneficiaries wishes, HOWEVER--the insurance company would only issue them to the PLAN and the insurance company does'nt want to transfer them to the custodian for the benefit of the children.

How do we handle the annuities if the plan is terminating and the sponsor dissolving?? Can or Why can't an insurance company allow transfer from the plan to the trustee/custodian?

[david rigby]

Try another insurer?

[sloble@crowleyfleck.com]

Apparently several insurers have been tried prior to me taking this over. Before I keep trying new insurers I want to make sure I am correct in believing that an insurance company should be able to accommodate this situtation.

Pax--thanks for your reply but can you cite any support for your apparent belief that SOME insurance company should be able to handle this?

Legal authority or authority based on experience would help me in my discussions with additional insurers. References for potential insurers welcome too.