401(k) Plan Termination

[Guest Cookiemonster]

I have a 401(k) plan going through the termination process. Everyone in the plan has sent in their distribution paperwork to either rollover the money over or take a lump sum distribution.

I have one participant in the plan with an account balance of about $90,000.00. He has not responded to letters or phone calls to fill out the distribution paperwork and return. We know where he lives, and contacted him in a reasonable amount of time. Can he be forced out of the plan? If not, what can be done to remove him from the plan? He is holding up the entire termination process.

[rcline46]

I believe what you are looking for is 401(a)(11) or something like that. Force outs at any level in a plan termination. Should make that participant sit up and take notice.

[Kirk Maldonado]

Have you considered the possibility that the participant is undergoing a divorce and his or her spouse doesn't know about the impending distribution?

I had a situation like that occur about 20 years ago when the participant wouldn't take a $750,000 distribution.

[mbozek]

You can send him a lump sum distribution.

[Brian Gallagher]

I would make sure that those letters you are sending him are going certified to make sure he is getting them.

[Just Me]

There is an exception to the requirement that a participant consent to a distribution in excess of $5,000, but it's pretty limited. On the other hand, this may work: Treas. Reg. §1.411(d)-4, Q&A-2(b)(2)(vi) says that in a profit sharing plan the plan can force out balances regardless of the amount if the plan does not have a J&S option AND the employer does not maintain any other defined contribution plans.