Paying RMDs to incarcerated individual

[msimpson]

If anyone has suggestions, or has developed a useful mechanism, for paying benefits (especially required minimum distributions) to incarcerated participants in, or beneficiaries of, a governmental plan, I would appreciate hearing them! (Note is a governmental plan, so not subject to ERISA.)

West Virginia law arguably requires the appointment of a conservator or other legal guardian before sums can be paid to an incarcerated individual, but does not specify who is to pay the costs associated with this; if the recipient is not willing (due to the small dollar amount of a distribution) or financially able (due to the costs of petitioning for court appointment/approval of a conservator) to arrange for the appointment of his/her own conservator, does the plan sponsor have the obligation to bear the costs to do so? We want to ensure the plan sponsor fulfills its fiduciary obligations, while minimizing cost outlay and the risk of a subsequent claim from the recipient that the funds were improperly paid out (if a conservator is not utilized).

One idea we are considering is having the plan sponsor contract, for a fairly minimal sum, with a local attorney to serve as “conservator” for any such incarcerated recipients. Has anyone tried this approach? We’ve also heard that some states may appoint a sheriff or similar public official to serve in such capacity, but we are not aware of any similar provisions in WV, and so are left without this option.

Any thoughts or suggestions welcome.

[Peter Gulia]

Does the West Virginia statute or other law really restrain the payment, or is it rather a restraint on the payee's deposit or negotiation of a payment?

If the retirement plan is administered by a State or local government official, does West Virginia law permit the official to ask for the Attorney General's advice?

On the idea you describe about paying for the services of a distributee's conservator, one wonders whether citizens might question such an expense as possibly an inappropriate use of the State's or its political subdivision's resources?

Or if the plan might bear such an expense, one wonders whether the plan's participants might question the expense? Although a plan fiduciary might have some duty of obedience to administer a plan according to applicable law and the plan's terms (to the extent that the plan's terms are not inconsistent with applicable law), such a duty might have some room for recognizing duties to incur only those expenses that are no more than what is necessary and proper to administer the plan.

Of course, this isn't advice, bur rather some partial suggestions about how one might prepare to seek advice.