John Hancock distributions

[Bird]

John Hancock used to process distributions with our (TPA) signature, or the sponsor's signature, but without the participant's signature, for up to $5,000. Now I'm being told that we need the participant's signature if over $1,000. The (new) rep was quoting something that referenced the direct rollover rules, eff 3/28/05, and I'm not sure if she was confusing the new law with John Hancock's requirements.

Can anyone confirm that Hancock changed their policy and dropped the max paid w/o participant sig to $1,000?

[E as in ERISA]

Are you trying to send a check to participant for over $1,000 without the participant signing/providing their consent on a distribution form? Only amounts $1,000 and under can now go directly to participant in cash without their consent. General rule is that participants must consent to distributions prior to retirement. Exception: 411(a)(11) allows amounts $5,000 or under to be forced out. Exception to exception: As of March 28 2005, 401(a)(31)(B) requires balances over $1000 that are forced out to be rolled over to an IRA. Check can't be cut to participant. Must be transferred to IRA provider.

[Bird]

No, we have our own forms and the participant has signed them, electing a lump sum. Now we are just trying to get Hancock to complete the payout; in the past they would follow our instructions with our signature for amounts under $5,000.

It has nothing, and everything, to do with automatic rollovers. That is, they probably DID change their signature requirements to assure that the participant signs off on a lump sum over $1,000, but IMO that's our job, not theirs.

[Guest tas1]

Amen to that!! Their requirement for a participant signature is ridiculous and extremely cumbersome.

We use our own forms on which the participant makes ONE decision - to roll or not to roll. We then transfer that data to the corresponding investment company form.

JH expects you to give the participant THEIR form to complete. A few examples of why this is a bad idea - they 'adjust' their vesting (100 is a popular number), had them sign as trustee, had them fill in wiring instructions that weren't even close to accurate (and guess who had to sort all that out!), had them select a cash distribution on page 2 but check the box for no withholding because it's a rollover on page 3. We don't do this anymore - we provide just the last page of the form to the participant with our package and tell them to do absolutely nothing else but sign it. Not everyone is happy putting their signature on page 3 of 3 without seeing 1 and 2 - so in that case the employer has to call in the former employee for a signature.

Now that it's lowered to $1000 - it's a problem that has to be dealt with on most distributions. JH has a 'different' way of doing certain things - we don't do as much business with them as we used to.

[Bird]

tas1, thanks for confirming - and commisserating. We do exactly the same thing - send a blank page 3 - and have the same issues. We'll just have to start doing it for $1,000 and up instead of $5,000 and up.

[Ron Snyder]

John Hancock has another screwy practice: They require the participant to sign a certification that he/she is not subject to backup withholding. This raises a few questions:

1. Why this certification, since qualified plan distributions are not required to do backup withholding anyway.

2. What if a participant IS subject to backup withholding? Will they simply refuse to pay him/her out? They have no other form and will no longer honor our forms. The participant is faced with lying or never receiving his/her payout.