Holding of Pension Payments

[Guest dkl2214]

I have an administrator who is holding pension payments via direct deposit if the participant does not inform the benefit office of a change of address. Upon providing the office with the new information, the office does proceed with the payment, not including any interest or other monies with the payment.

My problem is I'm not sure an administrator can hold a payment to a vested retiree who is in pay status, but I cannot find anything specific. Any ideas on this with any type of authority? I would appreciate any insight!

[mbozek]

I have an administrator who is holding pension payments via direct deposit if the participant does not inform the benefit office of a change of address. Upon providing the office with the new information, the office does proceed with the payment, not including any interest or other monies with the payment.

My problem is I'm not sure an administrator can hold a payment to a vested retiree who is in pay status, but I cannot find anything specific. Any ideas on this with any type of authority? I would appreciate any insight!

How does the PA know that the employee has changed address? The same bank account can be used by the participant after a move. There is an old IRS ruling from the 80's that held that once payments commence they cannot be stopped except under the suspension of benefits provision or death.

[david rigby]

Ditto.

[Guest dkl2214]

The administrator becomes aware of this due to SMM's and amendments being sent to the participants. The mail gets sent back to the administrator.

[david rigby]

Seems like the PA might be confusing some different things:

(1) if the PA thinks the retiree might be deceased, then investigate that possibility.

(2) if the PA thinks the retiree's address is incorrect (certainly relevant since a 1099R must be mailed), then investigate that. This possibility probably does not include stopping the payment.

BTW, if the bank thinks the retiree is deceased, it might not accept the direct payment, which would trigger the PA to investigate (1). Why not ask the bank if they have the address or will encourage the retiree to call the PA? Don't make a federal case out of this, just a little common sense.

[mbozek]

cant the Plan admin do a SS # check to determine if participant is dead? Most employers have acces to SS Data base of deceased participants.

How does the plan contact participants who have changed address? Or does the plan admin expect the participant to contact him or her when the checks stop?

[masteff]

Has the plan considered that those retirees have a valid expectation that the funds will be deposited in a timely manner and may have automatic deductions scheduled to draw on those funds? It's probably just sheer luck they haven't caused financial harm to a retiree. Whether or not it's illegal, it most certainly is irresponsible.

[Guest dkl2214]

cant the Plan admin do a SS # check to determine if participant is dead? Most employers have acces to SS Data base of deceased participants.

How does the plan contact participants who have changed address? Or does the plan admin expect the participant to contact him or her when the checks stop?

Yes, the administrator simply holds the checks until the participants contacts him to update him with the new address.