DB Plan that forfeits benefits

[Guest ircreader]

Has anybody ever seen a DB plan that requires the benefit of a participant, alternate payee, surviving spouse or any other beneficiary who can't be located to be forfeited unless and until the individual shows up and establishes a valid claim for the forfeited amount?

[david rigby]

Many plans (prior to recent regs on mandatory rollovers) do not pay to anyone who cannot be located. Merely a practical consideration when you know that the last known address of the former EE is no longer valid.

[Guest ircreader]

Makes sense. So if the same plan were terminated 10 years from now and the missing participants were never located, their benefits would still have to be paid to the PBGC, wouldn't they? (Assumimg plan does not permit mandatory distributions of amounts over $1,000)

[david rigby]

Distributions upon plan termination are usually different than during ongoing operation. In the former case, the plan has to fully distribute the benefit somehow, so it will typically include a lump sum for everybody, at least as an option for those over the mandatopry cashout limit.

But, you don't get to the PBGC Missing Participants program until you have done a search. BTW, that might mean it is worthwhile to do a search now.

[Guest ircreader]

Hey, thanks. Wondering if it's worth it to do the search when the benefit won't be payable for many more years (anywhere from 10-20 years) for the termed vested? Granted it's their responsibility to keep us informed of their current address and the cost of searching adds up with a large plan (more missing participants) and if the benefit isn't payable until the distant future we might just have to do a search again at a later date. Almost seems worth it to wait until the benefit is payable. If you have any thoughts, please let me know. Thanks again.

[Guest Pensions in Paradise]

I would make the argument that it is the plan administrator's responsibility to attempt to locate participants immediately. Otherwise, how does the plan administrator comply with the requirement to provide annual benefit statements and SAR?

[david rigby]

Unfortunately, that ignores the very obvious responsibility that the participatn has to keep the plan administrator informed of address changes. The PA has to send SARs to the last known address, but where is the requirement that the PA go to the expense of following up every time that address is a dead end?

Many companies provide a gentle reminder to their departing employees, "if you want the money, don't forget to keep us informed of your address."