Plan Trustee deceased

[Cynchbeast]

Owner of Plan Sponsor (he was trustee and plan administrator) died suddenly on 06/01/13. His sole heir seems to be his son - no spouse and no other children. The son and his attorney have had ongoing contact with us and has provided death certificate and some pages from his father's trust, as well as attorney letter saying he now manages his father's company. Company has closed doors and plan is terminating. Plan is a 401(k).

We are having trouble distributing funds to participants. Monies are with AXA Advisors. They have already allowed son to roll over his father's money into an IRA - a large amount. But they will not distribute to any other participants because they will not accept son's signature as plan administrator. They have provided us with a list of what they need to appoint the son as plan administrator, and the son's response to this was: "I don't have time for all of that, I'm sorry."

I can call his attorney - which I have already done once - but of course that costs him and so I must be careful about that.

Any suggestions on how to proceed.

[Lou S.]

Is the son the executor? If yes, I'd tell the son he should find the time or you'll be happy to refer his father's participants to local DOL office.

If some one else is the executor, I'd talk to them about talking over as Plan Administrator.

[Buffys Redrum]

"They have already allowed son to roll over his father's money into an IRA - a large amount. But they will not distribute to any other participants because they will not accept son's signature as plan administrator."

Who was the plan administrator for this rollover? Seems inconsistent.

[Cynchbeast]

In response to Buffy - yeah, that was really strange. The son signed form as both participant and administrator, and we included death certificate and other documentation that they say is not sufficient, yet they gave me some bizarre explanation as to why they would accept the request for him and not others.

Of course, that creates the situation we are in now - he got his money and can't be bothered with the other participants.

[ESOP Guy]

Of course, that creates the situation we are in now - he got his money and can't be bothered with the other participants.

Not that is was Cynchbeast's fault but that is one of the best reasons to have the owner be the last person to be paid from a plan in a plan termination.

[GMK]

... yet they gave me some bizarre explanation as to why they would accept the request for him and not others.

it would be interesting to hear what that explanation was (did they cite any regulations?),

but whatever it was, this looks like AXA has assumed fiduciary duties, since they established the (different) conditions under which different participants can get a distribution. Of course, they may have been a plan fiduciary already.

[Bird]

The company is most likely the Plan Administrator. so whoever owns the company is ultimately responsible for administering the plan, and appointing a trustee. If the son owns the company, he is responsible; if he delegated management to the attorney, then he should be able to take action.

I wouldn't be too worried about spending someone's money if they are uncooperative. I may take a little pleasure in it...

[mbozek]

I would politely explain to the son or his attorney that he has a choice. He can perform the duty of plan administrator to distribute the benefits due the other employees as he did for the plan assets he inherited form his father or he will be contacted by the EBSA as to why he is delinquent in performing the duties of plan administrator which he was expeditiously able to do for the assets he received from the plan. Once EBSA gets involved the legal fees he will pay will change his mind.

It only takes one call from a participant to get the EBSA involved. Don't know why anyone wants to take the risk of tangling with the EBSA.

I dont know how the son could authorize payment of his father's benefits from the plan without acting in a fiduciary capacity on behalf of the plan for all participants. He cannot be a fiduciary for payment of some benefits but not others.

If AXA is the fiduciary then they have the obligation to pay all of the other participants, not just the son.

Appointing the son as plan administrator is a no brainer since son is automatically the owner of the business by virtue of inheriting the business and can appoint himself or another party to act as PA to pay benefits.

[Cynchbeast]

We are still having trouble, many participants are clamoring for their money and the son is not cooperating.

We may now have to treat this as an abandoned plan. Does anyone have experience with this?

[GMK]

Document everything with respect to the son's denial to assume his duties or appoint someone.

and with credit to Lou S.'s and mbozek's references, it appears to be time to have a clamoring participant contact DOL/EBSA:

Find addresses and telephone numbers for the EBSA Office in your area or call toll free 1-866-444-3272 to speak with a benefits advisor.

Perhaps you could call EBSA for guidance on your available options.

There isn't a problem with funds not being available to distribute to these other participants, right? that is, he didn't take it all, did he?

[Cynchbeast]

No, he just took his. So he can't be bothered with everyone else.

Also, as we think this through we are wondering how to handle the 2013 5500 filing (if we do it) since there is no plan administrator to sign. Suggestions?

[Cynchbeast]

1) Sponsor of 401(k) was corporation, sole stock holder died suddenly and his son claims to be sole heir

2) Son has already gotten his father's money out of plan and simply isn't cooperating with process of paying out other employees. He "doesn't have time".

3) Since investment company hasn't received adequate documentation showing son as successor trustee, they will probably consider this an abandoned plan and notify IRS. We are told this process could take up to a year.

Questions:

1) Does anyone have experience the this abandoned plan process?

2) If we stay on as TPA, how do we handle 5500 filing for 2013 (and any subsequent years) when in effect there is no plan administrator or plan sponsor?

Note: the son keeps providing us with pages from his father's trust, but the document does not seem to include the father's corporation (the sponsor) so we believe that to be a part of the father's estate and son is trying to avoid probate

[K2retire]

Perhaps the prospect of the late filing penalties accruing to the company will motivate the son to sign it.

[Lou S.]

Who is the executor of the fathers estate? Impress upon them the importance of taking resposibility for the corporation and its plan. Refer participants to the DOL if the executor is non-responsive or "too busy to deal with it".

See the DOL website on orphaned plans for more information.

[mbozek]

1) Sponsor of 401(k) was corporation, sole stock holder died suddenly and his son claims to be sole heir

2) Son has already gotten his father's money out of plan and simply isn't cooperating with process of paying out other employees. He "doesn't have time".

3) Since investment company hasn't received adequate documentation showing son as successor trustee, they will probably consider this an abandoned plan and notify IRS. We are told this process could take up to a year.

Questions:

1) Does anyone have experience the this abandoned plan process?

2) If we stay on as TPA, how do we handle 5500 filing for 2013 (and any subsequent years) when in effect there is no plan administrator or plan sponsor?

Note: the son keeps providing us with pages from his father's trust, but the document does not seem to include the father's corporation (the sponsor) so we believe that to be a part of the father's estate and son is trying to avoid probate

If father was trustee then son as executor of father'/s estate is the successor trustee of the plan. Participants should contact nearest EBSA office to open an investigation and give agents son's phone no and tell them that son authorized payment of his father's benefits to himself but will not facilitate payments to other plan participants. Then sit back and watch son's legal bills grow.

[GMK]

Here's the handy link again:

Find addresses and telephone numbers for the EBSA Office in your area or call toll free 1-866-444-3272 to speak with a benefits advisor.

[david rigby]

Duplicate discussion thread.

http://benefitslink.com/boards/index.php?/topic/54557-plan-trustee-deceased/