The plan in question is being asked if a terminated participant's mother, who has a power of attorney to act on behalf of her son (the terminated participant who is in Iraq), if she can complete the withdrawals forms and rollover his balance in the plan to an IRA in his name. I'm pretty sure this is OK but can't find anything specific to this situation.

Adding info: the terminated participant is not in the military but working for a company on a government contract so the employer does not need to hold a job for him. The mother does not want a cash out, she wants to roll the balance over into an IRA in his name. My opinion, and I have not spoken to the mother, only the employer, is that she wants to be able to protect the $$ by investing in something that has little or no risk in his absence.

kittysarno:

Not sure why you wouldn't allow this. The Power of Attorney clearly states that the mother has the ability to act for her son.

Is this a voluntary or mandatory distribution? What I'm getting at: is she initating the distribution or merely facilitating a cashout in a way that's in his best interest? (Not being an attorney, I can't say that has relevance but certainly worth clarifying.)

We once has ERISA counsel who was of opinion that the participant had to be truly incapacitated and not merely unavailable (but those circumstances were for a person in the US and not in a war zone, which would certainly be an extenuating circumstance).

Under USERRA, the company must hold a position for the person. I do not think a distributable event has occured (loans, hardships are different).

YOu may want to consult legal counsel on this as the distribution may be improper, POA or not.

The attorneys would tell us this "assumes facts not in evidence". The original post did not say anything about serving in the military, or being on leave to serve in the military.
Nevertheless, good advice to make sure a distributable event has occurred.

OP said participant not in the military. If POA is designated as having authority for act on behalf of participant for financial matters why question it. If participant terminated employment to work for govt contractor you have distributable event.

Does the plan have language that describes POA policy?

First, thanks to the OP for editing your post to add the extra info. That's useful to know.


I'll append my previous statement, having realized now the difference between a durable POA and one that's essentially immediate, such as the mother would have here.

While I don't agree w/ what the mother's trying to do, that's no reason to say no. Janet raises a good question about does the plan have language about POAs. I'd also encourage the client to have an attorney make a quick review of the POA just to make sure it seems to be in proper order (think of it as insurance against a later claim the POA was blatently invalid).

To add to Masteffs post. Ensure the POA does cover this. I have seen some that are limited to endorsing checks and writing checks to pay bill, but not to open or close any accounts.