MidAmerica refuses to refund administrative fees they took from my retirement plan without my knowledge beginning in July 2008.
I was employed with Clear Creek ISD located in League City, Texas XXXXX, from November 1999 to approximately May 2001. Clear Creek ISD is a client of MidAmerica and I am a plan participant in a 457 Premier Plan Retirement Account which is administered through MidAmerica.
I have been corresponding with ****** ******, Director of Accounts Services of MidAmerica since January 7, 2013 in the attempts to have them refund administrative fees they took from my plan without my knowledge. My argument is that I was never notified by MidAmerica that as of July 2008 they would begin charging a $0.75 per month fee per participant on any dormant account. MidAmerica claims they have made reasonable attempts in the past to locate me; however, they never contacted their client, Clear Creek ISD, my former employer, to request my address.I have continuously lived at the same address for 23 ½ years. I believe that if MidAmerica would have contacted Clear Creek ISD in May 2008 instead of contracting with a locator service, they would have been provided my correct address and would have been able to properly notify me of the administrative fees to begin in July 2008.
Ms. ************ argues that MidAmerica still must continue to administer my dormant account and made multiple attempts over the years to locate me via a mailing, my former employer, MidAmerica's website and annual statements. She continues to stand firm on not refunding the fees.
I am frustrated because I was not given the opportunity to take a distribution due to MidAmerica's failure to contact my former employer so they could provide MidAmerica with my address.
I want MidAmerica to refund the adminstrative fees that they have been taking from my account without my knowledge since July 2008 plus any additional fees that are incurred while waiting for this matter to be resolved. So far, MidAmerica has taken $40.50 from my 457 Premier Plan. Had MidAmerica properly notifid me in May 2008 regarding administrative fees, I would have gladly taken a distribution at that point. MidAmerica should take responsibility for not properly notifying me of the changes in 2008.
Business' Initial Response
March 15, 2013
BBB of Central Florida
Longwood, FL XXXXX
RE: Case # XXXXXXXX: ****** ******
Please accept this written correspondence as formal response to the above referenced BBB complaint.
MidAmerica is the record-keeper and customer service contact on behalf of the program referenced in the complaint. ****** ****** was a participant of the Clear Creek Independent School District 457(b) Deferred Compensation FICA Alternative Program. This is a mandatory plan implemented for all part-time employees through Clear Creek ISD as an alternative to Social Security FICA taxes. We administer over 300 of these programs for school systems around the country; representing approximately 350,000 participants.
In 2008, with our client employer's written consent, we changed investment providers under these programs to allow for a more competitive investment offering, but also to begin charging a necessary nominal administration fee to participants who were no longer contributing to these plans and who could, at their convenience, take a distribution from the plan. Please note that Ms. ****** last contributed to this program in June 2001.
Well in advance of beginning to charge any fees, MidAmerica, notified all of our client's plan participants via a mass mailing that we were going to begin to apply a $0.75 fee per month/per participant for any dormant accounts The mailing was sent in May 2008, notifying that the fee would begin in July, 2008, allowing time to take a distribution before the fee was to begin being assessed, if desired. Attached is a copy of this notice from May 2008. There is verbiage that describes the definition of a dormant account and clearly states when the fee is to be assessed and that participants can take a distribution if desired.
In addition to the mailing, MidAmerica added verbiage to our website as well as to annual participant account statements that are mailed, notifying plan participants of the fee. This disclaimer has been reflected on all account statements sent since July of 2008. Last, each client is provided with a plan newsletter to distribute to plan participants. This newsletter outlines the fee and ability to receive a distribution. Each year this newsletter is updated and provided to our clients.
Please understand that we have and continue to undergo extensive effort to ensure that our clients and their plan participants understand the plan that their employer has adopted. The fee is extremely competitive compared to most any other retirement plan offering and the service and investment offering is very competitive as well, with accounts currently earning interest at 2.5% as of January, 2013. These services have allowed MidAmerica to become the preeminent provider of these very specialized FICA Alternative Programs nationwide.
Please also note that Mr. ****** is taking a distribution and her funds will be issued this month (March 2013).
Director of Account Services
(On behalf of Mr. ****** ******, President)
*scroll down for attached original fee notice*
ATTN: 3121 Social Security Alternative Plan Participant
MidAmerica Administrative & Retirement Solutions, Inc. (MidAmerica) provides administrative services for your Social Security Alternative (3121/Premier) Plan. The cost of these services has historically been paid by ReliaStar Life Insurance Company. As of July 1, 2008, ReliaStar will no longer be the investment provider for future contributions into this program, and thus will no longer pay the administrative fees associated with your account.
We have contracted with another investment provider, American United Life (AUL), a OneAmerica Company, to take over ReliaStar's contracts and continue accepting contributions for your plan. We feel that the new product with AUL is very competitive with that of ReliaStar and will provide you with a very competitive financial return.
As a result of these changes, the new structure with AUL is such that, instead of building the cost of administration into the credited rate as ReliaStar has historically done, MidAmerica will now charge terminated participants an administration fee of $.75 per month effective July 1, 2008. Terminated participants are those participants who have not contributed to the plan for one year, are no longer employed by the Town, and who could, at any time, request a distribution of their account balance. This new structure will allow for a more transparent program and should ultimately result in AUL crediting a higher interest rate. All funds deposited with AUL will earn 3.5% through calendar year 2008. In addition, the plan has a guaranteed minimum rate of return of 3.0% through 2011.
The fee will automatically be deducted from your total account balance each month and will be reflected on your annual participant statement. If you are a full-time employee with the District you may be eligible to withdraw the funds or continue the investment opportunity, without incurring a fee. If you are a full-time employee, please contact MidAmerica prior to July 1 to avoid fees being assessed if you are not withdrawing these funds. We will verify your employment status with the Town. If you have completely terminated employment, you may take a distribution of your account balance now, prior to any fees being assessed. You may access withdrawal paperwork by visiting our web site, at www.midamerica.biz or by contacting our customer service department at X-XXX-XXX-XXXX. Participants whose distribution forms are received by June 30, 2008 will not be assessed an administration fee, even if the distribution is paid after July 1.
MidAmerica is committed to ensuring a seamless transition to the new investment provider and continuing to provide you with a superior customer service experience. We sincerely appreciate your understanding as ReliaStar exits this particular marketplace.
Consumer's Final Response
(The consumer indicated he/she DID NOT accept the response from the business.)
I do not accept their response because MidAmerica never notified me of any changes to my plan. The first correspondence that I received from Mid America was an annual statement in January 2013. I have correspondence from Ms. ****** ****** with MidAmerica dated January 21, 2013 whereby she stated that they were not provided with an address for my account for several years. She also stated that MidAmerica had to contact a locating service twice to locate me. It is not my fault that MidAmerica did not consult their client, Clear Creek ISD, to get my address from them. Had they contacted Clear Creek ISD, they would have had my address. I have been living at my current address since June 1989 and have not moved.
Mid America has stolen funds from my account and I want the funds refunded since they did not notify me of any changes. Had they contacted Clear Creek ISD in May 2008, they would have gotten my address and could have notified me of the changes and I would have taken a distribution at that point but I was never given an opportunity because MidAmerica did not have my address. I never received any mass mailing correspondence from MidAmerica or any annual statements until January 2013.
I am expecting MidAmerica to do the right thing and refund the funds that were stolen from my retirement account because they did not notify me of any changes, which includes the fee charges because they did not have my address.
I can furnish you with a copy of the correspondence from Mid America dated January 21, 2013 if you need to see it.
Business' Final Response
RE: Case # XXXXXXXX: ****** ******
Please accept this written correspondence as formal response to the above referenced BBB complaint and rebuttal.
Prior to implementing the monthly administrative fees on dormant participant accounts, MidAmerica made a good faith effort to notify all plan participants and employers of the new process and the available options. This notice was mailed to Ms. ******'s address on file at that time. In addition to the initial fee disclosure notice, each year, MidAmerica mails out the Premier Plan Newsletter to its clients to provide to the Plan Participants, which includes important plan information like the administrative fees for dormant accounts.
To ensure that we have an address for as many participants as possible, MidAmerica reaches out to its clients annually with participant information requests for those accounts without addresses. MidAmerica included Ms. ******'s account in this annual request with the 08/31/2008 report.
The annual Participant Statements which contain additional reminders and notifications regarding the monthly administrative fee were mailed to the address we had on file (PO Box XXXXX, Webster, TX XXXXX-XXXX) up until February 2012. At that point, Ms. ******'s 11/30/2011 annual statement was returned as undeliverable by the US Postal Service. Her information was then processed by MidAmerica's address locator service to obtain a current mailing address for Ms. ******. On 05/15/2012, her address was changed to ******************, League City, TX XXXXX-XXXX after receiving a successful match with the locator service.
As indicated above, MidAmerica makes a good faith effort to educate its clients and participants on pertinent plan information by taking several different approaches to distributing notification and materials. Please also note that Ms. ******'s distribution at this time has been processed and issued to her as of 03/20/2013.
Acting Director of Account Services
(On behalf of Mr. ****** ******, President)