Demars Pension Consulting Services, Inc.

On October 11, 2016, we received a distribution request for [redacted] with the Mission Group.  Ms. [redacted] chose “a) A direct rollover of my entire Vested Account Balance to the IRA or plan designated in Section 2” as her distribution election.  Ms. [redacted] completed the form by...

marking the IRA box and requested the check be made payable to Prudential Mutual Funds, for the benefit of [redacted], Account Number [redacted]3 and mailed to Prudential Mutual Fund Services, [redacted], Providence RI 02940.  Please note that nowhere on the forms or in original correspondence did Ms. [redacted] notate or mention that the rollover was for a Roth IRA.  In fact, her account balance in the Mission Group only consisted of pre-tax 401(k) Salary Deferral funds.   In order to do a rollover from pre-tax 401(k) to after-tax Roth, it would be required to report taxable income in the current year which we would never assume that a participant is requesting taxation of rollover funds.   Ms. [redacted]’s distribution was processed as a Traditional to a Traditional IRA.  Again, there were not any notations nor any questions asked on how to convert the Traditional funds to a Roth IRA.  All the comments mentioned in the complaint said that we made assumptions whereas we processed based on the information we had been provided.  While the form did not state anything about rolling to a Roth IRA, and she herself mentions that she knew it was a Roth IRA, she never made any effort to inform us of such.   On or around April 13th, we got a call from Ms. [redacted] and also e-mails from her tax accountant ([redacted]) about what they were trying to do.  Since we had no control over the actual 1099 filing (other than what we transmitted to [redacted]) and we felt that the form was completed and processed correctly, we informed Ms. [redacted] that she would just need to convert her IRA to Roth in 2017 and have the income taxable at that time.  We did not think that [redacted] would be able to make the correction retroactively.   Apparently Ms. [redacted] spoke directly with a [redacted] representative and was informed that the correction could be made but we were not informed of such until after the Revdex.com complaint had already been filed.   I corresponded with Ms. [redacted] on April 17th and informed her that I had also talked with [redacted] and they were willing to make the 1099 change for her.  At that time, I requested that she confirm that she understood that there would be tax consequences to her in 2016 since she was converting Traditional to Roth.  She stated that yes she wanted us to go ahead with the 1099 correction.   I e-mailed [redacted] on April 18th the correction information and after some e-mails about an address change we were told that the request had been submitted.   On Monday, April 24th  Ms. [redacted] requested a follow up from [redacted].  They responded they did not have an ETA but it had been submitted.  I too followed up on Friday April 28th and on Monday, May 1st , I was informed by [redacted] that the 1099R was reprinted and mailed out on Friday, April 28th.   I believe this was the resolution that Ms. [redacted] had requested in her complaint.  There never was any intention of ignoring the participant’s request.  Once we knew [redacted] could correct the return, we more than complied with her request.