Terminated DB Plan Participant Still Waiting After 12+ Months – No Communication, No Distribution Timeline

Hello,

I’m a terminated participant in a small employer-sponsored Defined Benefit Pension Plan that was retroactively amended after the plan sponsor realized employees were mistakenly excluded. I’m looking for advice from those familiar with ERISA compliance and DB administration — especially regarding timelines for distribution, participant communication, and what constitutes a “reasonable” delay.

Here’s a timeline of events for context:

🗂️ Timeline of Events

Mar 2012 – Began employment at Company A.
2015 – Company B launched; work shifted there, but payroll remained under Company A.
Jan 2020 – Owner established a Defined Benefit Plan without informing or including employees.
Aug 2024 – Employees notified the plan would be frozen effective August 31.
➡️ Plan sponsor claimed he had received bad advice and was correcting the error.

Sept 2024 – I was involuntarily terminated shortly before turning 55.
➡️ Termination was attributed to cost concerns related to plan corrections.

Oct 2024 – Received an estimated benefit calculation (2020–2023 only).
➡️ Sponsor stated 2024 portion was still pending.
➡️ I turned 55 and became eligible for benefit commencement under ERISA.

Dec 2024 – Mar 2025 – Followed up multiple times. Sponsor provided vague responses, no new documents, and no updated calculation.

Jun 2025 – Sponsor stated original actuary was replaced by a new vendor who is re-reviewing everything.
➡️ Promised to resend plan documents and updated estimate — nothing received.
➡️ I spoke with DOL rep, who said resolution was expected by September 2025.

Sept 2025 – With four days left in the month, still no update. I followed up again.
➡️ Sponsor responded defensively, said the situation is "stressful" and “complicated,” and that he “can’t provide details” until authorized. Also discouraged me from speaking to DOL or other employees — despite his lack of communication.

My Questions:

• Is it common or acceptable for a DB plan sponsor to take over a year to finalize calculations for 7 or fewer employees?

• Does switching actuarial firms justify months of silence with no updated estimate or election paperwork?

• At what point does this become a breach of fiduciary duty or an enforceable ERISA violation?

• What recourse does a participant have when the plan sponsor won't respond, and DOL appears to be passively monitoring?

Thanks in advance for any insights. I'm trying to avoid escalation, but the silence and lack of transparency have gone on far too long.

What's the nature of the industry for the plan sponsor?  The plan may also be under the jurisdiction of the PBGC, only the sponsor wouldn't have originally thought so if he thought the plan could be "just for him."  (Might add something to the delay, although a year sounds like negligence somewhere.)

More than 12 months might indicate the Plan is going through the IRS Voluntary Correction Process or less likely but still possible the IRS Determination letter program upon plan termination and they are awaiting IRS approval before processing benefits. 

If you are eligible for benefits, file a claim for benefits and save any paper trail. Request a copy of the Plan's Summary Plan Description if you don't already have it with you claim. If they remain unresponsive consider contacting your local Department of Labor branch for their assistance.

Your frustrations are certainly justified, but they may be misplaced.  It sounds like the plan sponsor is trying to correct the problem, so the delay may be related government entitles as Lou suggested, but more like they are related to the actuary - either the original one who provided "bad advice", or the new one who may be looking for a viable solution that the sponsor is willing to accept.  Or, the new actuary just might not be great with deadlines.  Unfortunately, there are a lot of different business models for actuaries and TPAs and some of those models are not the most efficient.     

Did you receive a Summary Plan Description (SPD)?  If not, you should request one.  It is typically 10-20 pages and will explain the plan provisions.   I agree with Lou that you should file a claim for benefits.  The SPD will contain specific language about how to do that. 

• Is it common or acceptable for a DB plan sponsor to take over a year to finalize calculations for 7 or fewer employees?  No, typically benefit calculations can be prepared within a few week.

• Does switching actuarial firms justify months of silence with no updated estimate or election paperwork?  No, but it happens. 

• At what point does this become a breach of fiduciary duty or an enforceable ERISA violation?  Unfortunately litigation is very expensive and likely not worth the effort.

• What recourse does a participant have when the plan sponsor won't respond, and DOL appears to be passively monitoring?  You can keep calling, maybe hire a lawyer to send a letter, keep the DOL on them.  Just generally be a pest until they respond.

Thank you all for the thoughtful and informed replies — very helpful to see these perspectives.

To Lou's question about industry: the plan sponsor operates two small businesses in e-commerce/consumer goods. The DB plan was created in 2020 but initially excluded all employees (including me), and only in 2024 did the sponsor acknowledge this oversight and begin corrective steps — apparently after IRS review. The PBGC angle is one I hadn’t considered directly, but that could explain part of the timeline if termination or underfunding is involved.

Re: IRS VCP or Determination Letter Process — I believe they are indeed going through the Voluntary Correction Program. The sponsor mentioned working with a new actuary (Alliance) to fix the prior setup and implied the IRS had already been involved before the switch. That said, I’ve still never received a Summary Plan Description (SPD), updated estimate, or any election paperwork, despite asking since last October.

To both Lou and Effen’s point about filing a claim: great advice — I haven’t filed a formal written claim for benefits yet, just detailed email requests and a DOL complaint. I’ll be submitting a formal claim in writing this week and will explicitly request the SPD again. That should trigger clearer obligations on their end and create firmer documentation.

And to Effen’s larger points: I agree the sponsor appears to be trying to fix things, but the lack of any communication for months — even after promising a September resolution — has crossed into unacceptable territory. I'm the only terminated participant over age 55, and I was told (verbally) that final resolution would arrive by 9/30. That now looks unlikely.

The switch to Alliance may explain some of the delay, but not all. Silence for months with no estimate, no documents, and no updates — despite repeated formal requests — just doesn’t feel like good-faith administration at this point. I'm documenting everything and now exploring escalation options within the DOL and potentially legal support if this continues into Q4.

To give you a sense of how communication is being handled, here’s a quote from the plan sponsor’s most recent email to me (sent this morning, after I asked if we were still on track for September):

“You will be receiving a significant benefit and it is very costly and stressful for me. I wish you would respect this and refrain from continuing to demand dates and resolutions. I have been advised that we are following all of the correct procedures.”

Reading that made me feel like I was being unreasonable or out of line — even though all I’ve asked for is a status update and basic documents related to my benefit. It feels like I’m being blamed for disrupting a process that has provided no timeline, no estimate, and no transparency for over a year.

Thanks again for the thoughtful replies and reinforcement on the claim filing path — I’ll update if anything changes.

No dispute with prior advice.  Possibly relevant is the change of actuarial firms:  was the plan sponsor less than forthcoming with the prior actuary, and/or less than willing to pay fees?  I'm suggesting the delay might be explained by plan sponsor actions and/or inactions that caused the prior actuary to "drop out".  This is not an excuse, but it might be an explanation.

I honestly don’t know the full details of the fallout between the plan sponsor and the prior actuary. From what I’ve gathered, that original firm was the one who gave the bad advice in the first place — which led to employees being excluded from the plan. What confuses me is that even after acknowledging the compliance issue, the sponsor apparently moved forward with a Voluntary Correction Program (VCP) using that same actuary, only to “fire” them a few months later in the May/June timeframe.

Whether the switch was due to cooperation issues, billing disputes, or an effort to reset the process is unclear. But the timing feels strategic — especially since I’ve still not received any updated benefit estimate, plan documents, or timeline despite multiple formal requests.

I’m also beginning to wonder whether this is a stall tactic tied to potential underfunding. Based on the publicly available Form 5500 filings, it appears the plan may not have enough assets to cover all retroactive benefit obligations. If that’s the case, it would explain the hesitation to finalize calculations or allow distributions — particularly in my case, as a terminated and vested participant who would likely trigger an immediate payout.

Follow-up question:
Does switching actuaries mid-VCP typically result in this kind of prolonged delay — especially for a small plan with only a few participants? Or does this situation seem more indicative of sponsor-side mismanagement (or worse, financial avoidance)?

DR245 you raise good questions but due to the issues involved, the Plan may not be able to certify a timely AFTAP which might also preclude the plan being able to make lumpsum distributions, but that also triggers additional participant notices which it sounds like you have not received. And I don't know if that's on the sponsor, the old actuarial firm or the new actuarial firm or some combination of all 3.

As to you turning 55, there is nothing really magic about that age unless it is the Early Retirement or Normal Retirement Age in the Plan which you won't know until you get the SPD. It's possible but not likely that the Plan is setup to only allow distributions at NRA which might not be until age 65 in which case there is no delay right now because you're not yet entitled to benefit. That would be unusual in a small plan such as this, especially one they thought only covered the owner but not impossible.

Based on the industry, it does look like the Plan would be PBGC covered so they may also be dealing with past filings for that as well. Also, if they are a PBGC plan that is termination, that will bring up a whole additional set of forms notices and timing requirements they need to make.

I do sympathize with the owner who does seem to have gotten some poor or at least incomplete advice on plan startup but he may also be to blame for not supplying the right data.

As to why they might switch midstream, maybe contact with the IRS clued him in to the fact that maybe the prior firm was in over their head and he should switch. I don't know, but from the owner's standpoint I'm sure it is stressful and he probably doesn't have a full handle on what the correction costs will be yet that could be substantial.

And lastly, because they are in a VCP situation they may not even know what your benefit is until the IRS approves whatever corrections they submit and sometimes the IRS can be quite slow.

And yeah, if they thought they only had to fund for one participant and found out several years later than a bunch of participants should have been accruing benefits, it's quite possible the Plan is underfunded, and the sponsor may be trying to figure out how it can stay in business and still fund the plan.

just minor additional thoughts - if you have made a written request for the SPD and have not received it, that is usually something the DOL, EBSA can get and forward to you. 

Are you/were you a highly compensated employee? 

If so, and you are requesting a lump sum distribution, it is possible the funding is not adequate to allow for a non-annuity distribution. 

If the new actuarial firm is redoing the work from scratch, back to the beginning of the plan, that can take some time, and might be drawn out based on all the things everyone has already mentioned. 

Did the employer have a 401(k) plan as well? Were you eligible for that plan?  For very small employers, it can be more cost efficient to give large benefits as employer contributions into a 401(k) plan, rather than retroactively add everyone to a DB plan. If that is the case, or something they are considering, then likely compliance for both plans would need to be redone back to 2020. 

Many small business owners seem very entreprenurial to me, and if there are other businesses they have that were part of a related testing group, but weren't included in the plans correctly,  the complexity of the correction might be larger than you realize. 

I work in HR for a large-ish employer (about 40,000 participants but in a total of four plans).  I have found the Department of Labor to be an excellent resource for participants with "issues" while at the same time being fair-minded about facts presented by the employer.  When my company has been the object of a complaint the DOL representative has keep the process moving without undue delays and so far all the cases have been resolved in our favor.  Current events may have left the Department understaffed, but I would not give up on the DOL yet.  But the other steps such as requesting the SPD, filing a formal claim for benefits, etc. are very appropriate.  There is a financial penalty if the plan administrator does not provide certain documents in a timely fashion--as high as $110 per day.  

Now that you have filed a claim, make sure you stay on top of deadlines under the plan's claims procedures (which are usually included in the SPD, which you haven't received yet) and this regulation: 29 CFR 2560.503-1. The employer's unresponsiveness (and especially their failure to provide a copy of the SPD) may lead a judge to excuse your failure to follow the claims procedures, but just in case, I would dot your Is and cross your Ts. 

When you receive a copy of the plan document and/or SPD, check to see if there is a provision that says that a lawsuit must be brought in a particular district court within a particular period of time (usually 1 or 2 years). 

The employer should give you the following documents upon request within 30 days, otherwise statutory penalties can kick in (at the discretion of the judge), although you may have to request certain documents specifically, and there is some disagreement among courts about whether certain types of documents are included in this list: 

(4) The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary,[2] plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. The administrator may make a reasonable charge to cover the cost of furnishing such complete copies. The Secretary may by regulation prescribe the maximum amount which will constitute a reasonable charge under the preceding sentence.

A lawsuit is probably not worth it, but the threat of a lawsuit gives you some leverage, assuming you have followed the claims procedures. If you were to sue, you could sue to recover your benefit with interest, collect statutory penalties for the plan's failure to provide the requested SPD (and possibly certain other documents, depending on what you have requested) within 30 days after receiving your request, and possibly obtain other relief. If you were terminated because the employer did not want to pay you some kind of enhanced benefit that kicked in at age 55, then you might have a claim for wrongful interference with protected ERISA rights under ERISA section 510 (29 USC section 1140). 

We have VCPs that have been outstanding at the IRS for a year or more without being assigned to an agent yet, and I expect the delays will only grow with all of the layoffs and resignations.