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Distribution made from corporate account


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So, here's the question - plan Trustee liquidates funds to pay a terminated participant. Doesn't open a trust checking account - deposits the funds to corporate account, and SAME day sends check to participant, or directly to the participant.

Now, I know this is a no-no, but it happened. Question is if this in any way invalidates a rollover, since it technically didn't come from a "trust" account?

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I have seen many instances over the years where the plan's check writing function passed through the corporate account - not a best practice but in and of itself probably not a compliance problem BUT, maybe an issue if there is any float, especially if checks not cashed timely. If checking account does not pay interest, then I think OK.

The important issues are tax withholding and remitting (if/when required) and reporting - running through a corporate account does not change any aspects of those requirements.

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