I have a client who is trying to clean up their plan and force out any ex-employees balances to save administration costs.

[Guest Why]

They have three individuals they cannot locate. They utilized the IRS forwarding system but no contact resulted. The balances are small with the largest being under $500.

What is the approved method for removing these individuals? The company is located in Louisiana (in case that matters).

Any suggestions would be great!

Thanks

[Guest hyper]

DOL Field Assistance Bulletin 2004-02 will give you some guidance.

[Brian Gallagher]

Is there no guidance in the plan document itself? There should be something that deals with lost participants.

Our document allows for the money to be forfeitted. If the person ever claims the money later, the plan owes the participant the money (if enough in the forf acct) or the company would have to come up with it.

[Alf]

Is a specific provision in the plan document the way to go? How do you handle earnings if you just take the forfeiture?

I truthfully believe that everyone can be located these days (you have a SSN for crying out loud) if you try and that the people finder services work well. Actually sending the money to the proper participant/beneficiary has got to beat forfeiting the money and having that hanging over your head forever.

[mbozek]

Not everyone can be located because people die, change their names or are deported and the plan should not be required to pay for the locater services. Many people who are located do not respond because they have ex-spouses, the IRS or creditors who are after them or because they have assumed a new identity. It is very rare for missing participants to return and request payment of benefits and the employer can get better use of the funds by forfeiture than keeping them in an account for which an admin charge is owed.