Paying lump sums after window expires

[James]

Is there a reasonable time frame you can allow for a plan sponsor to pay out a lump sum after a temporary window has expired? Let’s say someone claims their packet was lost and they had to resend, does a sponsor have to honor the payment, say within 30 days, 60 days, etc?

[david rigby]

IMHO, zero days.  A well-designed window will includes good communication, adequate time, and follow-up.

[Effen]

I agree with David.  

That said, in one situation where some election forms came in late, the attorney simply revised the amendment to add a few extra days on the window. 

I definitely would not recommend ignoring the provisions of the amendment or giving any leeway in the plan's provisions. 

[ERISAAPPLE]

The Sponsor is required to follow the plan, as amended by the window amendment.

If the participant claims there was a fiduciary breach, the sponsor (or other fiduciary) can settle the claim, but that is something altogether different.  As an attorney, I have advised clients to amend a window program to pay a late payment (the client wanted to pay it), but made it clear that was done as part of the settlement of the alleged fiduciary claim, and I had the participant sign a release.   The participant said they never received the packet and that the sponsor breached its duty by sending the packet to the wrong address.  I believe it was a bogus claim, but the client wanted to be nice.  

[Todd Flessner]

A well designed window would also contemplate this type of situation beforehand. (based on past experience)

We've all dealt with the various exceptions that pop up with windows in the past, so asking those questions up front will help deal with them on the back end.

Follow the amendment language.