Cannot locate missing participant in DC Plan - bad SS #

[Guest bmurphy]

Hello,

I've read thru many of the psotings on this subject. Situation: Company is out of biz & we're paying out the last remaining people. Using IRS & private search services we've located all but one participant. The private service returned a different name which leads me to believe that the wrong SS# was used when enrolling. Prior custodian does not have access to enrollment forms to verify. Balance is small (under $100).

I've seen mention of doing 100% withholding & forwarding to IRS, but with a bad social & no address that probably won't work. Any other ideas so we can put this plan to rest?

[mbozek]

Treat it as a forfeiture and distribute among remaining participants or use it to pay final admin expenses. If you dont have a correct ss no you cant send to IRS as 100% withholding or escheat it to state. Remember cant terminate plan until all asets are distributed.

[Blinky the 3-eyed Fish]

You say that you are led to believe the SSN is bad, but you are not 100% absotively posilutely. I would choose the 100% withholding option. That way at least there is a chance the participant will get the benefits of the money. If you follow mbozek's advice, the participant is guaranteed to get nothing and you are operating the plan outside of the document.

[mbozek]

#1 answer. If the social and the name dont line up the 100% withholding may be returned or there will be an inquiry by the IRS to correct the ss no. For less than $100 there is not much risk if plan treats the amt as a forfeiture or uese the account to pay admin expenses because the employee cant be located. Otherwise plan sponsor/ admin could become involved in a drawnout process to find the correct ss no. of somecone who may have given false ss. information. But see second thought on this issue in next paragraph.

#2 If same ss no. was used for withholding of income tax for this employee why are you questioning the ss no. now? Bottom line question- If IRS accepts the funds under 100% withholding (because the IRS previously accepted income tax withholding for this employee ) why do you care if it goes to wrong person?

[david rigby]

At the 2003 Enrolled Actuaries meeting, Dick Wickersham of the IRS clearly stated his preference on the question of 100% withholding: don't do it!

[mbozek]

Did DW state the authority for not remitting 100% withholding? If you eliminate it as an option then the sponsor has only two options for disposing of plan assets upon termination when a participant cannot be located- escheat to the state- but most states will not accept assets from a qualified plan because state escheat laws are preempted by ERISA or divide the assets up among the remaining participants or use it to pay termination expenses.

[Mike Preston]

I knew there were three kinds of actuaries....but..... (g)

[david rigby]

Funny, Mike.

No, DW did not offer any reasoning or authority.