Money Purchase Plan termination where assets are with TIAA in individual annuities

[Belgarath]

So, has anyone done a plan termination lately with TIAA where assets are in individual annuities? We haven't for quite some time, and there were, to say the least, difficulties.

When you are terminating a plan, the participant has to be given the option to get a distribution, or roll over the funds. But TIAA "requires" (or did require) the participants themselves to call TIAA if they wanted to surrender. And participants frequently won't bother to do this in a timely fashion. 

Do you know how they handle this now? And do you by any chance have the contact information for a person at TIAA who actually KNOWS something and is willing to discuss how a plqan termination can be handled in this situation so that a final 5500 can be filed?

Thanks in advance! 

[Peter Gulia]

Is the plan ERISA-governed?

[Belgarath]

Yes.

[Peter Gulia]

While an impulse is for the plan to distribute to participants not money but rather each’s individual annuity contract, that won’t work unless the annuity contract provides rights and conditions that meet the plan’s provisions to follow ERISA § 205 and the insurer is obligated to administer, without the employer/administrator’s involvement, the plan’s and annuity contract’s provisions for a survivor annuity or other protection for the participant’s spouse.

Does the TIAA individual annuity contract provide those obligations?

This is not advice to anyone.

[ratherbereading]

Basically the same issue --  here is the response I received from someone on this board - I cannot remember who though so I cannot give credit: 

[Bill Presson]

Bless your heart, @Belgarath!

[Belgarath]

THANK YOU RBR!  Now, two  additional questions, if I may impose further. Does TIAA, in your experiences with this type of situation, provide some sort of statement, etc. that the annuities comply with this? Or if they don't automatically, will they if you request? I realize the client can ask TIAA this question, but I thought I'd just see if you had already dealt with this question. Thanks again - your response was very helpful (and TIAA was not, although it was years ago when this last came up, so things may have changed since then).

[ratherbereading]

5 hours ago, Belgarath said:

THANK YOU RBR!  Now, two  additional questions, if I may impose further. Does TIAA, in your experiences with this type of situation, provide some sort of statement, etc. that the annuities comply with this? Or if they don't automatically, will they if you request? I realize the client can ask TIAA this question, but I thought I'd just see if you had already dealt with this question. Thanks again - your response was very helpful (and TIAA was not, although it was years ago when this last came up, so things may have changed since then).

Welcome! This was my only experience with TIAA and they did not provide any statement (to me at least), nor did I ask for one.  

[Peter Gulia]

If the plan’s count of participants is such that the plan’s administrator engages an independent qualified public accountant to audit the plan’s financial statements, the administrator might consider asking the accountant whether she would concur with the administrator’s finding that a distribution of the individual annuity contracts ends the plan.

If the IQPA is not satisfied that the employer/administrator’s disassociation from the annuity contracts ends the plan, the IQPA might feel she should not furnish a “clean” report on the plan’s financial statements.

This is not advice to anyone.

[Bob the Swimmer]

Belgarath --I've had one experience years ago when TIAA pushed back and actually called participants at dinner time to try to influence them not to cash out. And the biggest problem was there was a nine-year lagging cashout of the annuities if they did decide to cash out. Don't have a name but our client was treated IMHO very rudely by the vendor as we even flew to their HQ in Charlotte to discuss this issue. There should be some legislation addressing this problem with old participant-signed annuities tied to the vendor.

BOB

 

 

 

[Peter Gulia]

I’m curious: Was the impoliteness or rudeness that TIAA was unwilling to consider doing something the contracts did not obligate TIAA to do? Or to consider refraining from something the contracts or law permitted TIAA to do? Or was it more than that?

[Bob the Swimmer]

Peter with due respect to the vendor---My client the CFO early on tipped his hand that he did not favor these individual contracts (wish he had not done that)--so they treated him with a lack of decorum and professionalism--made us wait in their lobby in Charlotte after we flew there for more than an hour before they shunted us to a small nondescript conference room---I found out that a larger plan in our geographic area---the much larger Jefferson Health System where my son is an endocrinologist, was allowed to cancel its individual contracts quickly and cashed out in apposition to the 9-year trailing provisions--so size matters  !

TIAA maintained a campaign of calling our individual participants at home to keep their funds there--again, in my opinion, unprofessional the way it was done.

I am a fan of yours and live in a 'burb of Philly part of the year and have been an ERISA attorney for more than 49 years.

[Peter Gulia]

Thank you for sharing that sad story.

No matter the business or legal positions, there’s no excuse for impoliteness.

I have many times presented my client’s hard No, sometimes when I thought my client’s position was unwise or wrong. Yet, I’ve always listened respectfully to what others asked and said, even when that presentation was profoundly disrespectful or abusive. And I’ve always politely explained my client’s outlook.

[Bob the Swimmer]

It is a small world in our business and what goes around, comes around. I just can't respect them or their marketing campaign

which makes it sound like they're out for the public's best interest.  Be safe.