Participant Signature on Excess Contrib Withdrawals

[BG5150]

I deal with several big asset carriers who hold my clients' plans' money.

On some of their withdrawal forms for excess refunds (ADP, ACP, etc), there is only a Plan Administrator signature line. There is no Participant authorization needed.

For some reason I'm not comfortable with that. I know that it's up to the PA to get the money removed from the plan timely. However, the taxation withholding on the distributions are voluntary. On the forms there are the normal choices for default tax, no tax or other tax that the PA can choose.

Do you find it odd that the PA should be making those decisions? Or that the carriers would accept taxation decisions based on the PA's, rather than the particpant's, say-so?

I know as we get closer to the deadlines, not having to get the participant's consent is a luxury, but something just doesn't sit right with me when distributions are processed with, perhaps, arbitrary tax withholding decisions. (This is all assuming that the PA doesn't have explicit instructions in writing from the participant already. I mean, c'mon, who has that?)

What are your thoughts?

[Bird]

They want to get things done, and I don't blame them. The PA should be giving the participants a form that says "what do you want to do about WH? If you don't reply we will do X." Personally, I'm happy to keep some distance between large investment companies and participants; they're often making them sign off on spousal consent and all sorts of stuff that isn't right but they think gives them extra protection.

[Bill Presson]

I don't see anything odd about it at all. They are acting on what the PA is telling them and that's perfectly alright. It's up to the PA to make sure they have the appropriate instructions and forms from the participants.

We do almost no work with the insurance company type products. Almost everything is open architecture and we use 4 different custodians. Participant instructions are completely irrelevant to them and I think it should stay that way.