Distributions of Small Balances

[JKW]

Is there a ruling I can print out on moving small balances to the forfeiture account for those participants who already received a distribution but maybe recieved a very small dividend after or a settlement check for an account held years ago? I recall reading the cost of the distribution exceeds the balance then there is a de minimus rule. Any advice?

[DMcGovern]

This may be out-of-date, but I have this in my notes from years ago:

IRS Q and A from 2000 APSA Annual Conference

52. Can a 401(k) plan be amended to forfeit residual balances of under $20 for participants who have been paid out because of separation from service; subsequent to these distributions dividends posted resulting in diminimis balances.

IRS: No.

Effectively, the fees charged for residual distributions would wipe out the balance. But it is still a bother!