Signing off on hardships

[Guest newport]

Is there a way to circumvent the plan administrator signing off on hardship withdrawals? He does not want to be responsible for determining a qualifying hardship. If it is listed in our plan document that these be allowed to employee, then what can we do if he refuses to sign them. Is there a signatureless process?

[Lou S.]

Eliminate hardship withdrawals?

[GMK]

Is there a way to circumvent the plan administrator signing off on hardship withdrawals?

Amending the plan to eliminate hardship withdrawals will take care of it once the amendment is in place, ...

but in the meantime, the plan administrator is required to operate the plan in accordance with the plan document. Otherwise, there will be big trubles and expensive repairs.

The PA can deny benefit claims, but in that case the PA must notify the participant of the why's and wherefore's in accordance with the claims procedures and time limitations specified in the plan document.

This plan administrator needs a refresher on fiduciary responsibilities (and maybe a backbone implant). "I don't wanna" is not an available option.

[Guest Sieve]

You're all being too hard on the PA, and your suggestion (basically, that the PA must gut it out) is not the only answer. The PA can appoint someone (usually the TPA) to review & approve/deny hardship applications. This is not a particularly difficult task if the plan uses SH hardships. Even assuming granting hardship distributions is a fiduciary obligation, it can be assigned to a non-fiduciary if the plan permits such an assignment--and such an assignment is permitted pursuant to ERISA Section 405©.

For example, here's what the Corbel Basic Plan Document says:

The Administrator may appoint counsel, specialists, advisers, agents (including nonfiduciary agents) and other persons as the Administrator deems necessary or desirable in connection with the administration of this Plan, including but not limited to agents and advisers to assist with the administration and management of the Plan, and thereby to provide, among such other duties as the Administrator may appoint, assistance with maintaining Plan records and the providing of investment information to the Plan's investment fiduciaries and, if applicable, to Plan Participants.

[GMK]

You're right, Sieve. Sorry I blew up.

As long as the PA does something (consistent with the plan document) to handle these decisions and doesn't just sit on the benefit claims. The PA still retains ultimate responsibility for the decisions and is responsible for assessing that the assigned person is competent to make the decisions. Seems like that olde fiduciary thing just can't be avoided.

[Guest Sieve]

I certainly do understand the frustration with the I-don't-wanna and the why-do-I-hafta type clients!! Sometimes we just need to give them workable alternatives that allow them to give others the day-to-day responsibility for certain plan activities.

Of course, those attitudes are often just warning signs, because these types of whiny clients are usually the ones who turn into the we're-now-gonna-blame-you-for-everything-that-went-wrong-including-the-things-that-you-warned-us-against-doing clients!