Forms and Distributions according to Plan Terms

My father in law loved to look through the supermarket circulars and get a bargain. When organ juice would be on sale, he’d load up on OJ, and proclaim to the household that they were pushing OJ aim the house for the week.

The Department of Labor (DOL) proclaims initiatives that they’re going to push and all they really are doing is announcing what type of compliance issues they are going to focus on. One of these initiatives is dealing with plan distributions.

On audit, plan sponsors are going to be reviewed by DOL investigators to insure that distributions are made according to the terms of the plan document. That deal with the form and time of payment because of death, disability, and termination of employment. They will also make sure the right protocol is followed with the type of forms being offered so if a plan says installments are a form for payment, that it’s actually being offered. They also will look to ensure that the timing of payment is consistent with what the plan says. They are also going to make sure that checks of retirement payouts are cashed and if not, what is the plan sponsor doing with that issue.

In a nutshell, I recommend plan sponsors take a look at their distribution provision and make sure that it’s consistent with what the plan document actually says.

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