Distribute Very Small Account Balances?

[Casey]

Is it permissable to forfeit rather than distribute very small account balances, (e.g. $15 or $20)?

In this situation, cost to employer of processing the check is $15, though this is not charged against the participant's account. So, the employer could be paying more to the TPA than the employee will receive.

I know that under the IRS correction programs, an employer need not make small corrections, but I am not aware of anything that allows the employer to forfeit very small accounts rather than distribute

Would your answer be different if the balance in the account, however tiny, represented 401(k) or other participant contributions?

Thanks!

[Mike Preston]

On the one hand, you have the practicalities of the situation making it seem like it is anything but cost effective to provide for the distribution. On the other hand, you have the fiduciaries of the plan charged with administering the plan in accordance with its terms. I think the fiduciary concerns win. Pay them. Cost of doing business, if you will.