ERISAWiz

ESOP, when you say he can't take a partial, do you mean he can't take a partial distribution, i.e. he can't leave part of his account behind in the plan? And changing the plan to allow a partial is not a problem. I'm just trying to figure out if we are prohibited by the IRS from changing the plan to allow him to leave some of his money in the plan after rolling over part of it. Thanks for your help.

Jim, a lump sum is not the only form of distribution. Annuities are the normal form of benefit, lump sum is the optional form.

ESOP, Thanks for responding. Yes, the DC plan and the 401k plan have already merged. The guy is retired, and he wants to roll over a portion of his money into an IRA. The merged plan document does not address what happens to the remainder that isn't rolled over. We are trying to figure out if the IRS requires that the remainder be distributed or if he can leave it behind in the merged plan. We can certainly amend the plan document to do what is required, but I don't know what is required. I hope this clears up the confusion.

Lou, could you explain what you mean when you say "You'd likely create an optional form of benefit available to all participants"?

I have a 401(k) plan that merged with a DC plan. Within the new merged plan, participants have two accounts: one for elective deferrals (401k) and one for nonelective deferrals (DC). A participant wants to roll over some of his balance. The plan allows for rollovers, but it doesn't address what happens if the participant doesn't want to roll over his entire balance. More specifically, it doesn't say whether the portion that isn't rolled over must be (a) distributed at the time of the rollover or (b) left in the plan. Is either one required or prohibited by the IRS? Or can we amend the plan to pick either option? Not sure if it makes a difference, but the distribution options are annuities or a lump sum. Thanks to anyone who can help.

Thanks Qdrophile. But is there anything preventing us from amending the plan to allow him to roll over part of his account while leaving the other part in the plan?

Thanks for responding Lou. He is retired. The normal form of benefit is a joint and survivor annuity (for married) and single life (for unmarried). Optional is lump sum. The problem is that the plan doesn't address what happens to the different accounts when a participant wants to make a rollover from one of them. Does the entire account need to be rolled over? And what happens to the other account? I can't find any direction on this in the Code or anywhere else.

A multiemployer 401(k) plan and a DC plan merged. Each participant now has two accounts within the merged fund: a 401(k) (elective deferral) account and a DC (employer contributions) account. A participant wants to roll over his 401(k) account into an IRA. Is he forced to roll over the entire 401(k) account, or can he roll over just a part of the 401(k) account? And if he rolls over all or part of the 401(k), what legally must happen with the DC account? Is he forced to take a distribution on the entire DC account or just a part or nothing at all? Thanks for your help.

Thanks for the response MoJo. Is there any guidance for active plans on this issue that you're aware of?

I've read the recent (and previous) guidance from the DOL regarding how a terminating DC plan should deal with missing participants. However, I've never been able to find guidance about how a strong, active (i.e. non-terminating) plan should deal with missing participants without violating any fiduciary duties. For example, we have a DC plan whose administrator would like to know how to deal with missing participants with small account balances. Obviously the admin can and should use the same search methods used for terminating plans, but what happens to the account balances? Roll them over to an IRA? Escheat to the state? Do nothing? Thanks in advance for any help.