Insurance Co. with 401K Will Not Communicate

[DHK]

The three companies:
1) Third Party administrator
2) Investment Advisor to the plan
3) Custodian

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Another great resource, especially with the DOL ruling:

https://www.dol.gov/agencies/ebsa/a...ter/publications/a-look-at-401k-plan-fees.pdf

 

[LostDollar]

Thank you for that reference. (I need to find a way to organize these things so I can find them again.)

So.... vocabulary becomes the key.

My long post, in brief.

If chris and client's (attempted) contact has been with the third party administrator, they should consider revising their strategy to approach the (former) employer company's 401k plan administrator.

 

[chrisgjim]

Years ago annuities used to be so much more simpler. I think what the present company (The Standard) is doing is using the privacy laws to keep the money as long as possible.

There are no privacy issues here. Both companies have all the private information that is needed (SS#, phone# DOB etc.) on my client. My clients in completing all the transfer forms, from both companies, has stated her wishes.

For The Standard to declare that they can not discuss what is needed to transfer the money that my client has requested to the new company is total BS. So the client has to go to the insurance company that has her 401K, determine what the outstanding requirements are, if there are other forms she must acquire those forms, get them completed and forward them back to her company.

I have not done a 401K transfer in a few years, but in years past if there was a form needed the companies would communicate, I have never seen a company stonewall like this before.

Is it the responsibility of the client to make sure outstanding requirements are completed?

 

[DHK]

It's not the first time. If a form is not the correct form, or it is not in good order, the companies can just "sit" on them or ignore them. I've had that happen a couple of times.


The Standard doesn't have to talk to you because you don't have anything to do with them or the plan participant. It is not BS. It's called client confidentiality.

And yes, it is the client's responsibility to have everything completed correctly. Or rather, since you are advising the client... it's your job to do it right for the client... but the company doesn't care about you. It's about their requirements.

Just call the plan custodian / administrator / whoever (with the plan participant) and request a 401k direct transfer package to be sent to the participant and help them to complete the instructions once they receive it.

You can't do anything else until you take that step.

Unless you want to keep blaming the companies for the steps you failed to do?

 

[LostDollar]

From experience, limited to one company, EXACTLY AND ALL THAT DHK SAID.

In the situation(s) with which I am familiar, absolutely no motion visible to the plan participant would occur until the plan administrator was involved.

 

[chrisgjim]

It's not the first time. If a form is not the correct form, or it is not in good order, the companies can just "sit" on them or ignore them. I've had that happen a couple of times.


The Standard doesn't have to talk to you because you don't have anything to do with them or the plan participant. It is not BS. It's called client confidentiality.

And yes, it is the client's responsibility to have everything completed correctly. Or rather, since you are advising the client... it's your job to do it right for the client... but the company doesn't care about you. It's about their requirements.

Just call the plan custodian / administrator / whoever (with the plan participant) and request a 401k direct transfer package to be sent to the participant and help them to complete the instructions once they receive it.

You can't do anything else until you take that step.

Unless you want to keep blaming the companies for the steps you failed to do?

I have never said it's about talking to me. I know they can not talk to me about anything that is private The only time I talked to the The Standard is to ask what is there procedure on determining outstanding requirements.

The direct transfer package has been sent, but the Standard will not even acknowledge that it has been received. They have not communicated in writing to the client or the new company.

 

[LostDollar]

The only other thing I could think of would be to attempt to obtain a summary plan description and see if it has any info you're not aware of and/or to resubmit the packet in a way that requires a signature when received.

 

[scagnt83]

The three companies:
1) Third Party administrator
2) Investment Advisor to the plan
3) Custodian

This is not exactly the whole story. Government educational sources can be pretty good at times, but they will often use terminology that does not match up with the way these things work in the real world.


A 401k Plan has 3 main "parties" involved in the Plan.

1. Plan Sponsor

This is the business owner who started the Plan. For larger Plans it could be another executive or HR person. On rare occasions this function is outsourced to an Advisor.


2. Recordkeeper

This is what the DOL often calls the "custodian". However, in the 401k world, the correct terminology is the Recordkeeper. Technically there can be a separate Custodian and Recordkeeper, but 99% of plans do not.

3. Administrator

This can sometimes be the same as the Recordkeeper, other times it is a 3rd party (called a Third Party Administrator aka TPA).


- There may or may not be an Advisor on the Plan. But they have nothing to do with Transfer requests unless they act as a 3(38) for the entire Plan operations... which means they are a quasi Plan Sponsor.

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When you initiate a transfer request within the Plan, this is what happens:

1. The Administrator reviews the documents.

2. If approved, the Admin sends the documents to the Plan Sponsor to sign off on.

3. Once signed by the Plan Sponsor sends the docs back to the Admin, and the Admin tells the Recordkeeper to transfer the funds.

Generally speaking that is the order of things. It can vary slightly depending on if a 3(16) agreement is in place and if its a bundled or unbundled plan.

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Even though the Admin is the one doing most all of it. Usually you have to communicate through the Recordkeeper or the employer's HR department.

The Recordkeeper can usually tell you what the hold up is. Then you can troubleshoot from there.

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I have never said it's about talking to me. I know they can not talk to me about anything that is private The only time I talked to the The Standard is to ask what is there procedure on determining outstanding requirements.

The direct transfer package has been sent, but the Standard will not even acknowledge that it has been received. They have not communicated in writing to the client or the new company.

The Standard will tell the client the status if the client asks. It is not always standard procedure for them to confirm receipt of documents in writing.

If The Standard has not contacted your client (tell your client to check their email if they are on paperless statements), then the holdup is most likely with the Plan Sponsor needing to sign the documents.

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This has nothing to do with The Standard trying to "hold things up". They could care less if your client wants to move it.

Annuities and IRAs will have "conservation periods" where they wait to process paperwork while they attempt to save the business. 401k Plans legally are not able to do that. Once the paperwork is correct they will process it quickly.

 

[LostDollar]

DHK's post struck one memory chord. The scenario which I wished the op to consider was one that goes to DHK's description and the summarized recap I made above of my longer post. The situation involved a bifurcated administration situation and was so referred to in the business documents between the companies involved. The plan sponsor's summary plan description named a specific plan administrator. The plan administrator hired a tpa to assist. DOL may call that company a record keeper, but the business relationship described it as a TPA. Plan participants could request distributions from the TPA until they were blue in the face, but until the specific plan administrator named in the summary plan description became involved, nothing would happen. Period.

If the op's client is not communicating with the proper plan administrator, I suspect nothing will happen. Also, if this is a large organization, I know that mail can be misdelivered. Hence my last two suggestions above.

 

[walthamny]

Also some small 401K plan only allow distributions/transfers out quarterly. So they may be just waiting for the right time to complete transfer. If the company matches their stock and they are small cap, they can have all sorts of strange rules on rollovers.

Legally they are not required to process your paperwork upon receipt. The law says something like reasonable, 2 months or 2 days, your pick what is reasonable. Most companies are now not in a huge rush to process. Someone once went to court over a transfer that took over 2 years, the court case did not go anywhere.

I also had them loose the paperwork or when you call them on a 3way conference, they try to convince the client to stay while I am on the phone, and once they could not switch client mind, the call dropped. This has happened many times with 2 major financial players on more than one occasion.

So nowadays, when I sign a transfer paperwork, we either call at that time to find out requirements or I spend them to prepare my client for a 3 way call. I tell them what questions they may hear and what things they may stay to keep them from rolling over.

I only don't do phone calls on ACAT transfers as I can utilitize e-signature. 401k rollovers are almost never ACAT.