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Terminating Money Purcahse Plans--Lost Participants and Spousal Consent


BG5150

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Money Purchase Plan terminated 3 years ago.  Only accounts left are for lost participants and each has over $5,000.  Record keeper will not cash the accounts out and move to an IRA because of the spousal consent issue.

What can the sponsor do to get this plan closed up?

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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Would they be eligible to use the PBGC's missing participant program for DC plans? https://www.pbgc.gov/prac/missing-p-defined-contribution

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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The PBGC provides (if the distributee’s benefit is more than the ERISA § 203(e) amount [$5,000]) a joint-and-survivor annuity, unless the distributee elects, with the spouse’s consent, a different form of distribution.

Pages 60812-60813, 60828-60829 https://www.govinfo.gov/content/pkg/FR-2017-12-22/pdf/2017-27515.pdf

For the forms and instructions, https://www.pbgc.gov/prac/missing-participants-program.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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And EBSA's Field Assistance Bulletin No. 2021-01 (Jan. 12, 2021) interprets relevant law to allow a transferring plan’s administrator to “pay [the PBGC’s] fee from the transferred account, unless the plan terms prohibit such payment.”

https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/guidance/field-assistance-bulletins/2021-01.pdf

 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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  • 3 weeks later...

So, bad news.

We cannot use the PBGC program for this because the date of the plan termination is October 2016.  The program is only available for plans terming on or after 1/1/2018. (I thought it was October 2017, but still out of luck...)

Any other thoughts on how to get around the spousal consent issue?

Because these people are missing, we can't even be sure if they are married or not.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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