paying out amounts greater than $ 1000 in terminated plan

[Guest anne1]

For a terminated plan, if there are participants who won't fill out the distribution paperwork but have balances greater than $ 1000, do we have to roll those balances or can we just send them a check? The new automatic rollover rules only seem to apply to terminated participant in ongoing plans.

[E as in ERISA]

Technically the 401(a)(31)(B) requirement to automatically roll applies only to plans that have a provision to force out amount less than $5,000 under 411(a)(11). So you could interpret that to mean that it only applies when you force out an amount without the participant's consent pursuant to that specific provision of the plan. And that it doesn't apply when you distribute without consent pursuant to a different plan provision such as a termination. But it's not worded that clearly. And 411(a)(11) and the regulations under it aren't that well drafted either. 411(a)(11) just says you can't distribute amounts over $5,000 without consent. And also mentions ESOP dividends. But then the regulations under that section also acknowledge that you don't have participant consent on death benefits, QDROs, RMDs, plan terminations. Notice 2005-5 junked it up by specifically exempting payments to surviving spouses and alternate payees from the automatic rollover rules. As if death benefits or QDRO payments would otherwise be subject to the rule? So that leaves open the question of how much of 411(a)(11) and the exceptions to consent are really subject to the rule. IRS was going to issue guidance. But haven't seen any.