Rollover Check - disgruntled participant

A former employee/participant requested a rollover be made to their new plan at Great West.  They filled out the paperwork with the address/etc at GW.  However, when the former "platform" John Hancock issued the rollover check, they mailed it to the former employer.  They in turn immediately sent the check to the participant.  It was all done in a period of less than 3 weeks.  The former participant is now "up in arms" about the check not be sent directly to the rollover address.  She is hounding the former employer about it.  Someone told her that it should be spelled out in the SPD.  I thought that was an administrative call.  Any thoughts?

It's not going to be covered in the SPD.  

"I'm sorry that this didn't happen as quickly as you would have liked but many companies have a policy that they will only send checks to the employer, probably so they don't have to deal with returned checks, etc.  It's not a bank account and there are many rules and administrative procedures associated with retirement plans that often cause delays, but it is all perfectly legit.  If you don't like that answer, well, you can hire a lawyer but you will only waste your money."

I agree with Bird.  It is not going to be in the SPD, it is simply an administrative procedure.

John Hancock did it this way because of how the plan is setup in their system.  I have run into this issue a couple of times when doing rollovers to plans on the Fidelity platform.  Fidelity wants the rollover check made out to them but sent to the participant.  Unless you mess around with the JH settings, JH will send the check to the employer rather than the participant.

Record keepers like to do it that way so that the employer has a record of the distribution being made. They can take a copy of the check and keep it in the employees' file in case there is ever a question of whether or not they received a distribution from the plan.

My spouse personally had this same issue with taking money from JHancock (but they or the employer also seemed to somehow lose the first distribution form we sent and/or the lost the first check - it never made it to Fidelity or to our home or to the HR department at the former employer.)  They had to stop the first distribution/check and re-issue and that one they sent directly to the employer who then overnighted the check to us and we deposited it to a local Fidelity branch.

Sounds a bit like a pattern with JH!  Three weeks does sound like a long period of time when I've seen distributions processed in less than 48 hours from other recordkeepers on daily accounts (I am old enough to remember when distributions were processed quarterly or annually!)  3 weeks even with mail time seems a bit much.

I'll merely say this - I'm not judging anything without knowing all the facts, etc. - and one tiny detail can turn everything on its head.

We work with a lot of recordkeeping platforms, and we find Hancock to be excellent, and far better than many others who shall remain nameless.

Three whole weeks?!?  Good grief.  She is a former participant.  What Bird said. 

1 hour ago, rr_sphr said:

Three weeks does sound like a long period of time when I've seen distributions processed in less than 48 hours

There are so many circumstances that factor in that three weeks could very well be reasonable.  Without knowing all the facts, we just cant tell.  The Plan Admin may not look at and sign off on the form the same day it comes in.  It may come in on a Thursday and not be signed until Monday.  The the TPA needs to sign off on vesting etc, then off to JH for processing.  Since we know this wasnt a direct deposit, we can easily add another 5 days or so for the pony express.  It adds up.

27 minutes ago, Belgarath said:

We work with a lot of recordkeeping platforms, and we find Hancock to be excellent, and far better than many others who shall remain nameless.

Hancock is one of the easiest to work with for sure, and they wont nickel and dime you to death like some other platforms.  They have some quirks in the system but so do all the others.

8 hours ago, Pammie57 said:

A former employee/participant requested a rollover be made to their new plan at Great West.  They filled out the paperwork with the address/etc at GW.  However, when the former "platform" John Hancock issued the rollover check, they mailed it to the former employer.  They in turn immediately sent the check to the participant.  It was all done in a period of less than 3 weeks.  The former participant is now "up in arms" about the check not be sent directly to the rollover address.  She is hounding the former employer about it.  Someone told her that it should be spelled out in the SPD.  I thought that was an administrative call.  Any thoughts?

I'm having trouble understanding what the problem is.  This is an EX employee who is bugging her former company?  Fine; she calls and says "I got the check instead of it being sent directly to Great West".  Assuming the check is made out to Great West, the answer from the former employer is (and only once):

"Oops! Sorry. They sent it to you by mistake, so  now you should send it to Great West. Nothing we can do about it but it's not a tax problem because the check is made out to Great West and will be reported as a rollover.  Have a nice life!"

If she calls again berating the HR department; the answer this time is: 

"Still sorry; we told you what to do.  Do it or not, but now it's in your hands to make it happen.  Don't call again." 

I might be making a wild assumption...(!)...but it's possible that the distribution package the former employee received was confusing, contained many forms, and the process by which a rollover would be made was not spelled out clearly.  The result was that the participant was confused and/or misinformed or both. 

I'm sure the former employee is thinking about the earnings that she didn't receive as the check was floating around for three or four weeks, and I don't blame her for being annoyed.  Very inefficient process.  

I have worked on the employer side as well as for many of the big DB shops, and I've never heard of a rollover check being mailed back to employee's former company.    Why would they do that?  (If the employer needs to verify that each distribution check is correct, they need to find another administrator!!!)

The employer needs to take another look at the distribution package and make sure that the rollover process is clearly spelled out.  (For example, the form shouldn't ask for the rollover account address if it's not being mailed there by the old plan.)   

Bottom line - in my opinion, they need to acknowledge the confusion and misinformation that occurred and apologize for it.    That's normally all a call like this requires....   

(...but I wouldn't be shocked if she'd be looking for some adjustment for her loss, either.) 

P.S.  I'd make sure it's a member of the employer's benefits team calling her back, not a customer service center rep.  Just my two cents. 

This process also may have been put in place as another protection against identity fraud, particularly since the Equifax breach.  This way the check goes to the employer who sends it to the employee's address that the employer has on file, rather than an address that a fraudster may have requested.