Benefit Election Forms

[Below Ground]

Terminated person has a little of $3,000. Plan has cashouts retained for $1,000 and below, so no "automatic direct rollover". Also, person is no where near NRD.

Person was provided with appropriate notices and election forms. However, person does not want to complete election forms as provided to receive payout. Person wants the payout, but wants to use her own election forms that she makes up! Specifically, she demands that she send Trustee forms that she approves of, the trustee's signs and mails back to her, and then she submits forms directly to the institution holding the money. (She will not send any form she signs to the Trustee.) Stated reason is that she doesn't trust anyone in the process and wants to process payout herself.

Any comments or suggestions on how to deal with this are appreciated.

[JanetM]

Simple, tell her the Trustee makes the rules. Participant must follow the rules set by Trustee to receive benefits. Tell her if she doesn't follow the process she doesn't get to cash out the account.

[masteff]

Problem #1: she wants to submit the signed papers to the financial institution directly herself? Nope. The fraud auditor in me says no way.

Problem #2: the financial institution is not the plan administrator. What documentary evidence would the plan have to prove she properly requested the distribution if you don't have a copy of her signed form? When the IRS/DOL comes calling, you need to be able to show proper consent from the participant.

Question: are you TPA and is this person local to you such that she could come to your office and you could be in control of the copy of her signature and not the trustee? (I'm assuming it's the trustee she doesn't trust rather than you.)

PS - on the home made forms thing... I'd bet the financial institution wouldn't like them. Might be worth contacting them and asking if they accept requests on home-made / non-standard forms.

[Below Ground]

Thanks for replies. We are the TPA. It does sound like a good solution, but she trust no one, period! She says we are an "agent" for the sponsor so we can't be trusted either! She already received the appropriate forms directly from us. She mailed back to sponsor, not completed, telling the sponsor that this is what is going to happen.... (as detailed in my initial post) I've been doing this a lot of years and this is a first.

[rcline46]

Suggest she contact the DOL for advice on how to proceed when she won't use the forms provided.

[Kimberly S]

She's right that you work for the employer, but that doesn't change the facts. Has anyone recommended a therapist to help her with paranoia?

[masteff]

Here's an idea... she could have her signature notarized w/ the notary seal directly on top of her signature which would make it extremely difficult for the trustee to manipulate. This way the plan would know it's a valid signature and she'd have a measure of security about her signature not being replicated onto some other document.

[Guest mjb]

Short answer to all this nonsnese: Plan can only pay benefits in accordance with the terms of the plan which includes the submission of a request for benefits on a form provided by the plan which is property completed by the participant. If the participant refuses to complete the forms the plan can refuse to pay benefits until a mandatory distribution is required.