I dealt with a similar situation earlier this year, perhaps involving the same Russian ETF. The assets could not be transferred to the new recordkeeper via ACAT because they are subject to OFAC blocking sanctions. The fund wasn't available in the new SDBA so they could not be transferred in-kind, and these assets legally cannot be sold or traded so they could not be liquified.
We discovered one participant had holdings in the Russian ETF during conversion, and we simply left those holdings at the prior recordkeeper. All other assets were transferred. We will continue to track and include these assets for 5500 purposes etc. until sanctions are lifted and they can be transferred or liquidated, or the underlying companies in the portfolio file bankruptcy and the holding can be written down to $0.
The only other option we considered was whether the participant could take an in-service withdrawal and roll those assets into an IRA with the prior recordkeeper. The recordkeeper said they could accommodate this, and the participant was interested in doing it. Unfortunately, in our case the participant wasn't eligible for an in-service withdrawal.
