Missing Participants

[katieinny]

Does anyone know if the IRS has issued any further guidance on how they want assets distributed for missing participants? I understand that the 3 main methods are

1) forfeit the balance (my client's document says that can be done for balances under $5,000.)

2) open an IRA (if you can find a bank to take it).

3) Send it to the govenment as 100% withholding.

My client is leaning toward the 100% withholding option, but before I say go ahead, I'm wondering if there's been anything new issued within the past few months.

[Guest Rae]

I'd like to know as well. We are trying to complete the termination process for a DB plan which is NOT covered by the PBGC, and we have one participant who cannot be found. The PBGC won't accept the participant's distribution since it wasn't a covered plan.

[JanetM]

Rae - Can't you escheat to the state of last residence?

[katieinny]

I still think that 100% withholding of federal tax is a better way to go. That way the individual has a better chance of being found.

[Kirk Maldonado]

JanetM:

I think that there is a serious risk that state escheat laws are preempted.

[mbozek]

Many states will not accept plan assets because of ct decisions stating ERISA preempts state escheat laws. Why not forfeit the benefits and distribute among the other participants if it is not likely that the participants will not return or if the employer is going out of business.