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Terminated 401(k) Plans


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Guest margok
Posted

In determining how to handle unlocatables for a terminated 401(k) Plan, are there issues around taxing the distribution at 100% and reporting to the IRS ? My understanding is the participant would then be responsible for claiming this amount when filing their income tax return. This may not be the most favorable option to the participant as their monies become taxable, but it is necessary to close out the plan as swiftly as possible. Are there other considerations ?

Guest Lugeguy
Posted

All unclaimed funds would need to go to the State Unclaimed Funds department. Tax issues>>>since you are distributing funds then a form 1099R will be issued for those unlocatables.

These would be my recommendations.

Bob Rock

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