Terminated plan with small balance participants

[Guest trying2understand]

I know one of the options for paying participants out when they refuse to return their paperwork is to an FDIC account. I have no problem and routinely do so to IRAs. We have several participants in a terminated plan that are proving difficult, and any advice would be welcome. I also realise that the unclaimed property route is available, but its extremely cumbersome for the state the plan is in and we want to use it only as a last resort.

Participant One: completed and signed the distribution form. Check was issued. The participant refuses to cash it. Its been quite a few months, check was reissued, still won't cash it. Any ideas? Technically since the participant exists and we are in contact with them and they even responded, I don't see that it qualifies as "lost"

Participants two and three: have account balances just under $500, we cannot locate them, are there any banks or financial institutions willing to open accounts? the smallest IRA rollover I've found an institution willing to take is $500. I thought a regular bank or credit union might, but of course I haven't found one that will let me open up an account in another person's name w/o their knowledge or consent. Any ideas on this one?

Again, I am trying to avoid the state's unclaimed property route.

Thanks.

[SRP]

I am not aware of the FDIC account option.

However, Penchecks has a seeminingly promising solution to missing participant accounts and missing distributee accounts.

They will setup a missing participant IRA for participants who cannot be located.

They will also setup a Missing Distributee account for participants who have an outstanding lump-sum check that has had taxes withheld (and therefore should not go to an IRA) but that the participant has not yet cashed the check (you would have to stop pay the outstanding check as part of the process).

We are checking them out to solve some of our recordkeeping problems and it seems like an efficient method to get these types of problem accounts out the Employer and TPA's hands.

They also sponsor www.unclaimedretirementbenefits.com which appears to be supported/sanctioned by the DOL also.

Call Spiro at 800-541-3938 x 13 and tell him Steve at ePlan Services, Inc. sent you.

[Guest trying2understand]

My understanding is that with PenChecks there is a set-up fee incurred by the Plan Sponsor. The plan sponsor no longer exists and there are no resources other than the participant accounts. I would hate to go through the rigamarole of charging the fee to the three remaining participants, depending on how much it would be it may eat up quite a bit of their accounts.

It would be a good option for other plans, but this one is terminated and just has these three participants left.

[Kimberly S]

If the problem was created by the participants failure or refusal to act, why shouldn't they pay the associated costs?