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Force-out of "lost partiicpants" in ongoing plan


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Plan has the standard force-out of terminated participants option:  under $1,000 cashout, and under $5,000 roll to an IRA.  Plan is ongoing, not terminating.

If the plan administrator cannot locate someone with less than $1,000 can they roll the money to an IRA and let the new custodian work it out?  This is assuming the PA has satisfied her due diligence by sending mail to last known address and subsequently sent mail to a more recent address obtained via commercial means.  All attempts resulted in returned mail.

What happens is the mail is not returned, but the PA has reason to believe the participant is not at any of the addresses available through commercial investigation?  I guess the people living there now are just throwing away any correspondence to the participant at that address.

QKA, QPA, CPC, ERPA

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

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What does the plan document say? Always the first source, right? Many pre-approved documents I've seen that have the under $5k default rollover provision also give the PA discretion to adopt procedures to implement default rollovers for balances less than $1,000.

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I think that in the past, our place's "distribution department" has set up taxable (non-IRAs) accounts for the zero to a thousand folks.  (As I recall, we contract with Penchecks for our auto-IRAs, but they could set up non-IRAs for the under-1000 amounts.)  So it's basically the same admin process but with a different tax flavor.  

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Hi BG5150- the company handles Mandatory Rollover IRAs. If your interested in outsourcing the rollover IRAs, send me an e-mail and I can get someone to get you some information. We have various companies initiate the Mandatory Rollovers to us and from there, we try to contact the client and if need be, process the escheatment in certain situations. 

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