Money purchase plan is holding retirement accounts on a handful of deferred, vested participants. All of these individuals are likely in their 80's by now. An IRS letter forwarding request was made, but generated only one response. Death audits have turned up nothing.

The Plan is silent on forfeitures. Do we make an amendment to the Plan and treat these accounts as forfeited (unless the participants resurface)? 1.411(a)-4 seems to open the door to this possibility.

Is it any "safer" for the Plan to turn the money over to the state? Ideally, the Plan would like to continue
to hold the money...if it goes to the state the money will eventually be forfeited.

Thanks for your input.

Most state agencies that supervise abandoned property will not accept distributions of missing participants benefits from ERISA plans because state laws on abandoned property are preempted by ERISA. The plan could be amended to provide that the benefits of participants who cannot be located are forfeited subject to reinstatment if the participant or beneficary appears at a later time.

I have never seen a case where a state's unclaimed property statute was pre-empted by ERISA.

Manfuacturer's Life Ins Co. v. East Bay Restaurant and Tavern Ret. Plan, 57 FSupp2d 921 (CA); Commonwealth Edison v. Vega, 174 Fed 3d 870 (IL); DOL Op. 94-41 (TX)