Under $5,000 force out procedures

[FundeK]

Can anyone tell me how you handle balances less than $5,000? How long after you mail the notice to the participant do you wait before processing the distribution? I know you have to wait at least 30 days, but I am wondering what the "standard" timeframe is (if there is one). Do you think 90 days is average?

[Brian Gallagher]

I usually suggest to wait at least 45 days, maybe 60. Just because returned mail sometimes doesn't have the greates turnaround.

For example, I just got on my desk yesterday and letter that I sent out on Jan 12--much more than 30 days.

[david rigby]

This should probably be part of a written policy, so that you adhere to your timeframe for all participants.

[FundeK]

Thank you for your replies. For the majority of our Clients, our policy is to wait at least 90 days before processing the force out. We have a Client who is demanding to do it after 30 days. (at least 35 to allow some mail time). I thought it was a bit aggressive, but I wanted to see what others were doing.

[TBob]

If you wait at least 90 days haven't you exceeded the time limit for the notice that you sent out? After 90 days the notice is now stale and you would have to send another one and wait another 30 days before forcing out.

We wait approx 60 days give or take a couple of days.

[Brian Gallagher]

i would say the the un-official "reasonable time" definition--no less than thirty, nor more than ninety days--should apply.

[FundeK]

That was my initial reaction, but I am being told that we wait more than 90 days because we want to give the participant the full "time period" to request the distribution. We then process the force out after the distribution paperwork has expired. I was not happy about this to begin with, but I was then leaning towards saying it was okay.

So, you are saying that force outs need to occur before the end of the 90 day time limit for the notice?

[doombuggy]

I usually tell my clients that they should give the participant at least 30 days to respond. I do have one client that likes to give them at least 60, but the majority go with 30 days. The letter gets sent out from the trustee (not me, I am just the lowly TPA) and we recommend it get sent via certified mail/return receipt. The letter staes that the partiicpant has 30 days or whatever the specified period of time is to respond, or a lump sum check will be issued. I think my clients give a few extra days allowing for mail before sending in a completed form signed by the trustee to process.

i am not sure if this helps you, but it's my two cents.