Options/Requirements for Balances <$10

[Guest lhead7601]

I have a client with approximately 9,000 "lost" participants with accrued benefits of less than $10. All have had checks issued via force-out and returned so they are in a "outstanding check" status. Can anyone describe for me the legal requirements for handling these? My client operates in Minnesota - I haven't had a chance to look up their escheatment rules - I'm thinking that is their only option.

Thanks for your input.

[mbozek]

IF this is a DC plan why not just forfeit the benefits subject to reinstatement if the participant shows up at a later date. See. Reg. 1.411(a)-4((b)(6). Just amend the plan to provide for forfeiture. Or you could just make a distribution of 100% as withholding to the IRS but why give up the funds?. DB benefits are to be turned in to the PBGC.

[E as in ERISA]

But beware that regulation technically only applies to participants who are truly lost.

[Guest lhead7601]

Thanks - didn't even think about that reg. Appreciate the idea. I'll research further.

[Lynn Campbell]

Would this work? Charge each person $10 for processing the check?

[maverick]

I have an idea similar to Lynn's. Amend the plan so the annual/SA/quarterly/monthly per-participant recordkeeping fees come from plan assets. These $10 accounts would be wiped out in short order.

[ljr]

As to charging fees to the participant accounts, remember that even though the DOL thinks it's okay to charge terminated participants but not active ones, the IRS doesn't seem to agree.

[Guest saber]

Take a look at IRS Revenue Procedure 2003-44 Section 6.02 (5)(b) and see if that applies to your plan.

[david rigby]

http://benefitslink.com/IRS/revproc2003-44.shtml