Pending DRO/ terminating plan

[Guest SEBBH]

What if anything is the responsibility of a terminated 401(k) plan that is trying to distribute all of the plan assets. We are aware that a DRO may be pending. We have been asked by the attorney for the alternate payee for sample paperwork but we do not have a DRO or even a preliminary DRO. The participant has been given auto rollover notification and distribution paperwork but has not completed his paperwork, probably due to this pending issue. Can we just roll his entire account balance to the IRA?

[mbozek]

What if anything is the responsibility of a terminated 401(k) plan that is trying to distribute all of the plan assets. We are aware that a DRO may be pending. We have been asked by the attorney for the alternate payee for sample paperwork but we do not have a DRO or even a preliminary DRO. The participant has been given auto rollover notification and distribution paperwork but has not completed his paperwork, probably due to this pending issue. Can we just roll his entire account balance to the IRA?

Give the AP's attorney a deadline to submit the DRO to the plan and inform him that in the absence of a DRO the plan will be required to follow its terms and roll over the funds. A rollover to the participant's IRA would be subject to the jurisdiction of the state divorce court which could order the participant to transfer some or all of the IRA to an IRA in the name of the AP which would be no different in result than if the court issued a DRO to the plan.