Old Keogh plan still has assets. Must I spend the rest of my life trying to locate former employees so I can terminate the plan?

[Guest Moe Howard2]

I've been filing 5500 forms for years for a sole propritor's Keogh. The sole proprietorship no longer exists. In fact, the former sole proprietor closed his business years ago and disbursed funds to all participants except two of them. Those two have balances of only $600 & $400. They have moved and cannot be found, but still I have to prepare the annual 5500 because the plan still has assets.

The former sole proprietor is my client. He has resided in a nursing home for the past three years. Before moving to the nursing home he married a young sweet thing 40 years younger tham him. She is in charge of all his business affairs. She hates to have to pay me each year to prepare the 5500. I hate dealing with her. Now she expects me to hire a private detective to find the two former participants so she can pay them their measly benefits. I'll do anything to get her off my back but I'm not footing the bill for a Dick Tracey. She is rude and mean (I'm scared to death of her). I guess I could tell her to find someone else to prepare the 5500 but she thinks that I have to solve this problem for her. I guess she thinks it's my fault that these two people left town without a trace.

Are there any IRS rules that simply let us to stop filing the 5500 each year and just sit back and wait untill we hear form the two former participants by chance?

[chris]

You can't just stop filing the Form 5500. See the link re Corbel's synopsis of dealing with the lost participant issue

http://www.corbel.com/News/technicalupdates.asp?ID=251&T=P

Also, I'm sure you could search the Plan Terminations Board for prior discussion on the subject. A few years back I used the IRS Letter Forwarding Program for a client w/ approx. 60 lost participants. Took a little time to jump through the hoops of dealing with the IRS, but all 60 participants responded. I would think you would have a good chance with the IRS or SSA locating them. Once they know that "free money" is involved, they'll find you.

[mbozek]

Under IRS reg, benefits can be forfeited if the plan is unable to "locate the participants" and the accounts used to pay for the cost of terminating the plan and filing the final 5500. The plan needs a provision permitting the forfeiture of benefits of missing participants subject to reinstatment if the participants later appear which will be unlikely if the plan has terminated and distributed all of its assets. The client may prefer to pay for a locator service that will let you know if these people cannot be located since the IRS will not tell you if the participants are located and you will have to delay termination of the plan for some indefinite period to see if they contact you.

[david rigby]

Search these Message Boards for prior discussions, using such possible search words as "missing participant", "lost", etc.

[Bird]

We use Comserv:

alias@comserv-inc.com

If you don't already have a client number, write to them and tell them you want to set up an account to search for lost individuals.

It costs $25 per successful search. They find probably 90% of the people we're looking for. The client pays the search fee in our shop.