Benefit Distributions

[Guest dlogan6331]

How long after termination of a defined contribution plan are you entitled benefits. I know someone who never received notice of termination due to moving to another city. Apparently this happened a few years ago, and she wants to track down her funds.

[david rigby]

When a plan terminates, the sponsor usually spends some (but not infinite) effort to locate missing participants. If still not located, the sponsor may have:

- "paid" the distribution, but used 100% tax withholding (not a recommended course of action, but it happens),

- "forfeited" the amounts. This amounts to ignoring the participants, and promising to pay if they ever show up.

- established an account somewhere (such as an IRA),

- if J&S rules apply, purchase an annuity (not likely since an insurance company probably will insist on having a real signature from the participant).

The participant should contact the plan sponsor and ask. Name, SSN, former address will be useful pieces of information.

Caution 1. Before assuming there is a distribution coming, the participant should be certain she/he is (at least partially) vested.

Caution 2. If the original plan sponsor was acquired by another company, that does not necessarily mean the original plan was terminated.