Mike McWherter

FAB 2025-01 has 13 requirements to be met in order to escheat a participant's "small balance" account to a state unclaimed property fund - conditions 1 thru 4 and then #5 which has 9 more sub-conditions. They include but are not limited to updating the plan document to permit this if the plan doc doesn't already allow it, updating the SPD accordingly, documenting that escheatment is the prudent thing to do with that participant's account, and also documenting that the 9 sub-conditions under condition #5 are met by that state's unclaimed property program. Keeping in mind all 50 states, Wash DC and Puerta Rico have unclaimed property programs. Sounds like a lot of work for accounts $1K or less. As mentioned above, PenChecks and I assume some other providers will establish automatic rollover IRAs (404a-2) for any amount in excess of the distribution fee to $7K.

Jimbo, I'm PenChecks CCO. Let me know what part of the country you're in and I'll put you in touch with the right people here at PenChecks. ESOP Guy - I read BenefitsLink nearly every day. Thanks for the shout out! Sincerely - Mike

Or you could use a service provider like PenChecks Trust that specializes in distribution processing and can handle the 1099-Rs and 945s for you, as well as a number of other distribution-related services and processes. Full disclosure - I am PenChecks' CCO. Having said that, if you already use FTW I would certainly speak with them as I too think they are a quality provider. The good news is you have some good options available. Merry Christmas and Happy Holidays!

Hi Peter, I'm the CCO for PenChecks in San Diego. QTA is sometimes conflated with Ind. Fiduciary. Understandable but they're horses of different colors. We've been providing QTA services via our trust company subsidiary, as either the back-office service provider or as the named QTA, for several years now. Per DOL reg 29 CFR 2578.1(g)(1) and (2), the named QTA must be a regulated FI such as a bank, trust company, insurance company, etc., ("regulated community" as DOL collectively refers to them) and must hold the assets (i.e., custodian). Accordingly, TPAs and pure RKs can't be the named QTA although they could certainly perform as a back-office service provider. Mike McWherter, JD | Chief Compliance Officer PenChecks Inc / PenChecks Trust direct: 800.541.3938 ext. 307 | mobile: 619.315.9220 mmcwherter@penchecks.com | www.PENCHECKS.com PS - Was typing my response before I saw your updated post. Give me a call at your convenience and we can discuss. It's close but not exactly self-appointing. EBSA ultimately controls that. Thanks - Mike