Couldn't rollover 401K after my husband died

Submitted by Candy Lu on Mon, 2017-05-08 16:56

I hope someone can help me. My husband died in March, 2017. He was 57. He has one 401K account with his previous employer since 1998. His previous employer would not let me transfer his 401k to an IRA account because the owner said she couldn’t find the paper with beneficiary information (because the account was opened in 1998). The owner knows I am his wife since 1998. We got married in 1996. I provided the owner with death certificate and marriage certificate. I explained to her that spouse is the beneficiary unless I sign a waiver. Am I right? The owner kept ignoring my request. What should I do? Thanks!

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Permalink Submitted by Alan - IRA critic on Mon, 2017-05-08 18:05

Sorry to hear of your loss. You are correct about you being the beneficiary under federal law per Sec 401(a)(11) as long as you were married on the DOD and did not sign a waiver. This all sounds very suspicious, and you may need to get the Dept of Labor involved if the stonewalling continues. Do you have any recent plan statements showing the balance in the plan?

Permalink Submitted by Candy Lu on Tue, 2017-05-09 16:48

Thank you for the advise. Yes, I do have a statement for the period 1/01/2017 to 3/31/2017.

Permalink Submitted by David Mertz on Mon, 2017-05-08 18:31

To comply with section 401(a)(11) to be a qualified retirement plan, the plan agreement must state that the surviving spouse is the default beneficiary (unless that right has been waived by the spouse or, at the option of the plan, the participant and spouse were married less than one year, not the case here). I suggest obtaining a copy of the plan agreement.

Permalink Submitted by Candy Lu on Tue, 2017-05-09 17:07

Thanks for the suggestion. Prudential said I have to get a copy of the plan agreement from my husband’s employer. I don’t think the employer will give me a copy of the plan agreement since she doesn’t even want to sign the distribution form.

Permalink Submitted by Alan - IRA critic on Tue, 2017-05-09 18:56

Good point. What role does Prudential have here? Is this employer administering their own plan? Sounds like they may not be using a professional plan administrator. At least, if you husband has been getting regular statements you can compare them to see if there are any irregular balance changes over the years. Further, you at least know what the balance of the account is should you eventually need to hire legal counsel. You might consider calling the DOL to see if they have any advice. Would not retain counsel except as a last resort. https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/filingclaimforretirementbenefits.pdf

Permalink Submitted by Candy Lu on Tue, 2017-05-09 23:16

Thanks for the help. Prudential is the 401k invesetment compnay. The plan administrator is Ameriprise Financial Services company. I have contacted both Prudential and the Ameriprise, but they said I have to get the distribution form signed by my husband’s previous employor. I am stuck. I have contacted DOL. Hopefully DOL can help me. Thanks!

Permalink Submitted by Ben Meyer on Tue, 2017-05-09 21:04

You should be able to research the plan using the DOL online tool. You can lookup the most recent form 5500 filed by the plan, which should tell you the EIN of the plan and the point of contact for the plan administrator. Other plan details are also available in the form 5500 filings.

https://www.efast.dol.gov/portal/app/disseminate?execution=e1s1
https://www.efast.dol.gov/portal/app/disseminate
http://freeerisa.benefitspro.com

Permalink Submitted by Alan - IRA critic on Tue, 2017-05-09 23:31

Surely there are sanctions under ERISA for an employer stonewalling the beneficiary’s ability to have the account retitled as an inherited 401k. which is necessary before you can change investments, name your own beneficiary or do an IRA rollover. If you are under 59.5, you would normally not do a rollover to your own IRA unless you were very sure that you would not need to take distributions before 59.5. The reason is that distributions from your own IRA would be subject to penalty. You would either retain the inherited 401k until 59.5, or use PLR 2004 50057 to have the rollover made to an inherited IRA in the event you end up not wanting to have your account with these people any longer.
Ameriprise probably has the current beneficiary info for the plan if they are the administrator, but it is logical for them to get employer verification that you have not waived beneficiary status since data was provided to Ameriprise. That is likely to be the jist of the from they want to employer to sign, but there is no logical reason for the employer to drag their feet on returning the form since a waiver on your part is the only possibility that you would not be the beneficiary. You might ask Ameriprise what the possible reason could be for the employer to drag their feet here and how long they are being given to return the form. You might also mention to them that you hope it is not necessary to involve the DOL in this issue any further than the call you have already made. All that said, since you have plan statements and there is a professional administrator for the plan, the worst possible scenarios are eliminated and it should be smooth sailing once the employer returns the form.

Permalink Submitted by Candy Lu on Wed, 2017-05-10 18:20

Thank you for your information. At first, Ameriprise said I am the beneficiary. I told the employer that Ameriprise said I am the beneficiary, the employer then said “ask Ameriprise to provide me a proof.” I called Ameriprise to get the proof, Ameriprise then said “I don’t have any proof, I assumed you are the beneficiary because you are the wise”. The employer insists that she has to find the beneficiary paper before she signs the distribution form. My husband joined the compnay in 1996 and joined the 401k in 1998. The employer said my husband’s file has been archived at offsite since the file is so old. Ameriprise also said they couldn’t help if the employer doesn’t sign. This has been more than 2 months since I first contacted the employer about my husband’s 401k. I just got stuck with the situation. I have contacted DOL for help because the employer just keeps ignoring my request. Thanks!

Permalink Submitted by Ben Meyer on Wed, 2017-05-10 19:50

The administrator of the plan is responsible for producing the most recent beneficiary designation form filed by the participant. The beneficiary will rarely have a copy available of this form, showing that it has been filed and formally accepted by the plan. In the absence of finding an accepted beneficary designation form the plan needs to state that none exists. In this case the plan provisions will govern. For a 401(k) plan the plan is required to have the surviving spouse as default beneficiary. But even if the plan finds a beneficiary form designating someone other than the surviving spouse as beneficiary, it would not be valid unless they also have a waiver signed by the spouse, due to ERISA. So, in any case, the surviving spouse would be the beneficiary.
At this point the surviving spouse needs to submit a formal claim for benefits under the plan, stating all relevant facts. The plan must then give a formal response to the submitted claim. If the claim is denied, the plan will need to state the specific reason for the denial, along with the procedure for appeal. If the claim is denied improperly following an appeal, then the Labor Department may be able to intervene at that point. It would be a good idea to file the claim soon, to move the matter forward and to prevent the plan from taking any other action. Filing a formal claim needs to be the next step. In your claim you should request establishment of a spousal beneficiary account as a first step, and most defintely not payment of a lump sum. You can also request an explanation of the forms of benefit available as a surviving spouse, before you commit to any specific one. Are there any other persons who might also claim to be beneficiaries?

Permalink Submitted by Candy Lu on Wed, 2017-05-10 21:09

The employer says my son maybe is the beneficiary. My son is only 13. We got married in 1996, my husband joined the 401k in 1998 and my son was born in 2004. I know i never signed any waiver and I have explained it to the employer, but the employer said she has to find out the benefacary designation form. Can you please let me know with whom I should file a formal claim? The 401K investment company (Prudential) or the plan administrator (Ameriprise)? Is there any particular procedure or form to file a claim? Thank you so much for your help.

Permalink Submitted by Ben Meyer on Wed, 2017-05-10 22:23

In order to file a claim with the plan you should ask the employer the correct name and address for sending a claim. It is likely to be the Plan Administrator, the Administrative Committee of the plan, the Plan Sponsor, or the Employer. You can also look up the name and address of the administrator using the form 5500 lookup tool posted previously. You can also ask them to send you a form for making your claim. Keep logs of all your calls.
You should also request a copy of the Summary Plan Description for the plan, either for yourself or for your son, if he turns out to be the beneficiary. Then you can read about the forms of payment that are available to you. They must send this upon request from the beneficiary, although they might require payment for making the copies..
In your claim letter or form you should state that you are sending the claim to the office and address furnished by the employer, and ask them to advise you if your claim should be addressed to a different office. State that you are the surviving spouse, stating your husband’s name, and that you never signed an ERISA beneficiary waiver (assuming that is the case). Include copies of your marriage license and a copy of the death certificate, and refer to both of these in the claim letter or form. Ask for an explanation of the forms of benefit available before the plan makes any distributions. Ask them to kindly respond as soon as possible, but in any event within the period required by ERISA. Have your letter or form notarized and mail it via certified mail, return receipt requested.
It sounds odd that the employer says “maybe” your son is the beneficiary. If it turns out that your son actually is the beneficiary and that you signed an ERISA waiver that you may not recall, you will need to file a claim on behalf of your son. The specific procedures will depend on the laws of your state. In this case ask the plan admnistrator what is required.

Permalink Submitted by Candy Lu on Thu, 2017-05-11 04:49

Thank you so much for the information. The employer now says they can’t find the beneficiary information. 401k investment company has no beneficiary information either. The employer asked me to get a letter showing I am the beneficiary from Probate court. Sigh!

Permalink Submitted by Bruce Steiner on Thu, 2017-05-11 13:12

The court has no way of knowing who the beneficiary is. See if the spouse takes under the Retirement Equity Act. If not, see if the spouse is the default beneficiary under the plan. If not, see if the spouse is entitled to it via the Will. See my articles on spousal rollovers where the spouse is not the designated beneficiary: http://kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf (in the October 1997 issue of Estate Planning) and http://kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf (in the June 2015 issue of Trusts & Estates).

Permalink Submitted by Ben Meyer on Thu, 2017-05-11 14:14

I agree with the posting above that they have given a bogus response. The plan seems to be content to give you meaningless answers to your questions. Have all the responses you received been via telephone? Or have you received these answers from the plan in writing or via email?
Have you looked through all papers of your late husband to see if there is anything suggesting that a beneficiary has been designated? Sometimes a plan will send a status update listing the beneficiaries on file.
The next step should be filing a formal claim with the plan. That way the plan will either respond affirmatively, hopefully in your favor, or you will obtain a response in writing that you can use for any further action required. If you have a lawyer helping you with your late husband’s estate, possibly this person could assist in filing a claim for you with the 401(k) plan.
Since you say this is a 401(k) plan, it is almost definitely covered by the Retirement Equity Act (REA) and ERISA, making the surviving spouse the beneficiary unless a waiver has been executed. If the plan can’t find any papers designating a beneficiary, it means that the default beneficiary would apply, which is the surviving spouse.

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Couldn’t rollover 401K after my husband died

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