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403 B Blues

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I originally sent this to Dan Otter for his insight and he suggested I join this forum. So, here goes. I have been on layoff from my hospital since May 29, 2009. Even though I collect unemployment, I encountered some health problems and wanted to draw on my 403b earnings. I am currently sixty years of age. So, I contacted my financial planner who informed me I had to be terminated from my previous employer before I could do that and the hospital plan administrator had to "sign off" on the 403b before I could get distributions as per the IRS rule change in 2009. So we met and he handed me the material that the plan adminstrator had to "sign off" on. I called the plan adminstrator and he informed me that not only did he not have to sign the paperwork, he was advised by CBIZ not to do it as my major 403b contributions occurred before 2009. My financial planner said that it sounded like they did not include this on their Form 5500 and that is why I am in limbo. Needless to say, I vented my frustrations on my financial planner and pondered my next move. So, being in Pennsylvania, I contacted the Pennsylvania Securities Commission and was then directed to the Insurance Commission's Annuity Section. They directed me to the IRS who directed me back to the Pennsylvania Security Commission. So much for the beauracacy. Any suggestions you have would be appreciated.

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I contacted the Pennsylvania Securities Commission and was then directed to the Insurance Commission's Annuity Section. They directed me to the IRS who directed me back to the Pennsylvania Security Commission.

 

Typical of government-Pathetic

 

Do you have a hardship clause in your plant Where you layed off permanently? Or do they plan on calling you back?.

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I originally sent this to Dan Otter for his insight and he suggested I join this forum. So, here goes. I have been on layoff from my hospital since May 29, 2009. Even though I collect unemployment, I encountered some health problems and wanted to draw on my 403b earnings. I am currently sixty years of age. So, I contacted my financial planner who informed me I had to be terminated from my previous employer before I could do that and the hospital plan administrator had to "sign off" on the 403b before I could get distributions as per the IRS rule change in 2009. So we met and he handed me the material that the plan adminstrator had to "sign off" on. I called the plan adminstrator and he informed me that not only did he not have to sign the paperwork, he was advised by CBIZ not to do it as my major 403b contributions occurred before 2009. My financial planner said that it sounded like they did not include this on their Form 5500 and that is why I am in limbo. Needless to say, I vented my frustrations on my financial planner and pondered my next move. So, being in Pennsylvania, I contacted the Pennsylvania Securities Commission and was then directed to the Insurance Commission's Annuity Section. They directed me to the IRS who directed me back to the Pennsylvania Security Commission. So much for the beauracacy. Any suggestions you have would be appreciated.

 

Do you know whether the money is invested in an annuity or in mutual funds? Have you contacted the issuing insurer or mutual fund/brokerage directly?

 

Tom Geer

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This is just another example of why the employer should not be involved in the investment supervision. They don't want to do it, and they don't know how to do it and they are holding you hostage.

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I contacted the Pennsylvania Securities Commission and was then directed to the Insurance Commission's Annuity Section. They directed me to the IRS who directed me back to the Pennsylvania Security Commission.

 

Typical of government-Pathetic

 

Do you have a hardship clause in your plant Where you layed off permanently? Or do they plan on calling you back?.

 

 

I am on layoff until December 2, 2010 at which time I will be terminated.

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I originally sent this to Dan Otter for his insight and he suggested I join this forum. So, here goes. I have been on layoff from my hospital since May 29, 2009. Even though I collect unemployment, I encountered some health problems and wanted to draw on my 403b earnings. I am currently sixty years of age. So, I contacted my financial planner who informed me I had to be terminated from my previous employer before I could do that and the hospital plan administrator had to "sign off" on the 403b before I could get distributions as per the IRS rule change in 2009. So we met and he handed me the material that the plan adminstrator had to "sign off" on. I called the plan adminstrator and he informed me that not only did he not have to sign the paperwork, he was advised by CBIZ not to do it as my major 403b contributions occurred before 2009. My financial planner said that it sounded like they did not include this on their Form 5500 and that is why I am in limbo. Needless to say, I vented my frustrations on my financial planner and pondered my next move. So, being in Pennsylvania, I contacted the Pennsylvania Securities Commission and was then directed to the Insurance Commission's Annuity Section. They directed me to the IRS who directed me back to the Pennsylvania Security Commission. So much for the beauracacy. Any suggestions you have would be appreciated.

 

Do you know whether the money is invested in an annuity or in mutual funds? Have you contacted the issuing insurer or mutual fund/brokerage directly?

 

Tom Geer

 

 

 

The money is invested in money market funds, bonds and mutual funds. My portfolio is balanced and I have been in contact with the brokerage.

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So the bonds are bond funds.

 

There are different rules for distributions of different kinds of money. For money invested in mutual funds, hardship distributions are available only for employee, salary reduction contributions. It sounds like this is the case, but you should confirm that because employer contributions in mutual funds simply can't be distributed on hardship.

 

If all contributions were salary reduction, then the next question is whether or not the custodial account agreement under which the mutual funds are held allows for hardship distributions. The reality of mutual fund investments is that the mutual fund issuer and/or broker have much thinner margins than annuity issuers, and cannot afford the time and effort involved in making hardship determinations. So don't be surprised if the custodial account agreement simply does not allow hardship distributions.

 

If the agreement does allow hardship distributions, then, and only then, do you come to the question of who makes the determination. The broker/fund family probably won't because, again, they can't afford to get into that business. And, under the 403(b) regulations, you can't make the determination.

 

If your employer is taking the position that they are not involved and that the money doesn't have to be on the employer's Form 5500, this means that you, and not your employer, have the legal enforcement rights under the custodial agreement. They cannot, if that is the case, make the determination. So, there is nobody to make a hardship determination. That's why the individual custodial account agreement probably doesn't allow hardship distributions.

 

I have two other approaches for you. First, you have attained age 59-1/2. This means that the law, and almost certainly the custodial account, allow you to receive money without regard to hardship. All you need for this is a birth certificate.

 

Second, employers like to tell people they are on layoff, not terminated. It's an HR PR thing. If you are not getting any pay or any benefits (other than COBRA you pay for) and have no definite return time, you have a severance that entitles you to distributions. Your employer should be willing to certify to that.

 

Tom Geer

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