Delayed initial annuity or lump sum because of annual audit?

I applied for my lump sum in July since my age 65 100% date was August 1st. Paperwork says 15-20 biz days for distribution. I received confirmation email July 22nd confirming all docs received and in good order.  (Plan is fully funded) I received a call on August 5th I answered thinking they were confirming  my rollover check was being sent out, however I was told my distribution was being delayed until October 15th due to the annual audit.  I asked why I wasn’t told this when they accepted my docs July 22nd and she said she didn’t know why.  Being in the industry for 25 years (mostly in DC) I had never heard of anything so ridiculous, I said that and hung up. I’ve spoken to a few friends in DB biz and they said the same that this isn’t allowed under ERISA.  The company that I worked for IS the plan admin and they have a history of doing whatever they feel like…..can someone please comment and give me an opinion on this? 

My only comment/opinion is that maybe the person you spoke to actually didn't know why you weren't told about the audit; hanging up on her was rude.   You need to talk to someone at your company re this. 

I hung up after I said that was ridiculous and didn’t agree. I didn’t hang up rudely.   I decided to call the DOL and they said they’d investigate. The point is they have no precedent to hold distributions because of an annual audit for 4 months.  It’s ludicrous.  

Not sure what "annual audit" even means or why it would impact ongoing plan administration.  Annual audit by whom?  

Are they going to adjust your lump sum to reflect interest through date of payment?  If your NRD was 8/1, you should receive an actuarial adjustment to reflect the delayed payment.  

Agree that you should try to find someone on the DB side of the house and ask them what is really going on.  

Calling DOL is a little extreme at this point.  The PA hasn't done anything wrong.    

My former company was the most dysfunctional place on the planet.  Based on plan doc they won’t adjust interest (yes I’m aware of the US airways precedent).  My issue is they have a habit of playing by their own rules. Because they are a private company they think they can do whatever they want. I’ve involved the DOL. 

How have they done nothing wrong? An audit occurs every year - so they suspend initial distributions for 4 months every year? That’s not right. And the DOL agrees

You complete required paperwork for an 8/1 annuity starting date (effective date of payment). Payments can be administratively delayed, which is essentially the time necessary to process the distribution and have the check cut and mailed. Saying it can't be paid until the annual audit is completed is not a reasonable administrative delay. What if you retired 3/1, would they delay payout until October? 

The audit is for the 2024 plan year and should have no bearing on your payout, unless you are a restricted employee (one of the highest 25 historically paid HCEs). In that case, plan must be 110% funded AFTER your pay out and maybe the audit is required for an accurate value of plan assets - that is the only potential logical reason I could think of.

I agree with @Effen and @CuseFan.  I know of no reason why ANY "audit" would affect the timing of a legitimate payment. 

1. Hunch 1: the person you talked with had no idea why it was delayed and decided to throw out the word "audit" as a means of getting you to shut up/go away.   You are entitled to a better (i.e., correct) explanation. 
2. Hunch 2:  there may be a staffing reason, such that somebody is working on the Form 5500 and (therefore) cannot spend the time to process the payment; if so, this is a terrible reason for intentionally delaying a payment.

Also @Effen's comment about adjustment for any delayed payment date (for whatever reason) is exactly correct.

Case closed - DOL just called me back and suddenly they changed their tune and I’m getting payment within the week.  My previous employer is and always will be a dysfunctional garbage organization. 

Hence now your previous employer - congrats on resolution.