Lost Participant-No longer in the country

[Guest knightkj]

One of my plan's did a force-out distribution for a participant and the check was returned as "Adressee Unknown." After some investigation, the client found out that he had moved back to Africa. Any suggestions on what we should now do with this check (other than redepositing it in the plan)?

[mbozek]

Treat it as a forfeiture and allocate the proceeds among the remaining participants. If the participant reappears then the plan would have to pay his distribution. Otherwise you can pay it to the IRS as 100% withholding but this would be a waste because it is unlikely that the participant is going to pay US taxes and apply for a refund.

[QDROphile]

If you are going to forfeit, the plan document should have provisions providing for the forfeiture and what happens if the participant or other payee subsequently appears. You also have to determine if you have made reasonable efforts under the circumstances to locate the participant. A single mailing might not be sufficient, or it might.

[Fredman]

Not to overlook the obvious, last time I checked you can still mail things to Africa.

The original post doesn't say, so I'm assuming that the ER doesn't know where in Africia, but if they learned that he moved to Africa, then I would think they should be able to track the guy down and get him his money.

I guess what I'm really trying to say and as QDROphile points out they, they must make a reasonable effort. If they learned he moved to Africa and then quit looking, is that reasonable?

[mbozek]

the question is how much time should you spend trying to find people who do not want to be found. If the employee does not provide a change of address and the letter comes back addressee unknown it is likely the person does not want to be located. Put a memo in the file documenting the info you have and the returned letter and treat the assets as a forfeiture. Also it is a good idea to require plan participants to notifiy the Plan admin of a change in address by putting such a statement in the SPD. If the plan admin is eager then have them try to contact the participant through SS.

[maverick]

I have used the SS to contact people in the past w/o much success. Has anyone out there used those services that do this for a fee?

One of my takeover plans has more terminated participants than active, and I'd like to do some payouts. Thanks

Maverick

[Brian Gallagher]

We use Transunion. I'm not sure how much they charge or how to get an "account" with them. They have a website, so I'd start there... www.transunion.com

...bg

[J. Bringhurst]

Could you not just set up an account in the participant's name and let it get eaten up with administrative expenses/fees.

[david rigby]

Well, yes you could. You could also deposit the entire amount in my bank account.

But both might be considered imprudent.

[J. Bringhurst]

Well, I would suggest setting up the account in the participant's name and notifying the individual of the account (with account number) - and that expenses may erode the balance.....

[david rigby]

I like the advice above from mbozek and QDROphile; "forfeit" the entire amount, but keep a record of it, so that it can be paid if he shows up in the future. Document your procedures. Amend the plan first if necessary.