Plan termination

[Belgarath]

Profit sharing plan terminated in 2002. Everyone paid out, determination letter issued by IRS, etc...

Now years later, one of the mutual funds sends the Trustee a check for a little over $300.00, due to some settlement for something they did wrong - whatever.

What the heck is done with this? It would cost many, many times the three hundred bucks to attempt to locate, allocate, and pay all these former participants, which is ridiculous. What would y'all do?

[jpod]

1. Does the employer (or the successor to the employer) maintain another 401(a) plan? If so, stick it in there as earnings, or use it to pay an expense of that plan.

2. Give it to a charity.

Neither of these suggestions are from the Spaulding Guide, but on the one hand the plan is long gone, and on the other hand either choice is better than sticking it in the employer's pocket or a fiduciary's pocket.

[mming]

I'm with jpod - go for the good karma. And besides, that money will probably never be associated with the plan seeing how most investment accounts in qualified plans are registered with the employer's ID and/or name, but that's a whole other discussion..........

[Belgarath]

Thanks for the responses. I had a chance to dig a little more, and discovered the following FAB 2006-01. The DOL, reasonably enough, takes the stance that these are plan assets. However, they show a rare flash of common sense when they sugggest that in certain circumstances where the cost to allocte and distribute is too high, that it might be appropriate for the fiduciary to refuse to accept the check.

http://www.dol.gov/ebsa/regs/fab_2006-1.html

[Lou S.]

However, they show a rare flash of common sense when they sugggest that in certain circumstances where the cost to allocte and distribute is too high, that it might be appropriate for the fiduciary to refuse to accept the check.

So the mutual fund company was basically short changing the participants back in 2002 and the DOL's "reasonable approach" is to refuse the money?

I like the company cashing the check (provided the amount like here is "small") or donating it to charity ideas better. But thanks for the offical DOL position, it is good to know for the future.

[J Simmons]

Thanks for the responses. I had a chance to dig a little more, and discovered the following FAB 2006-01. The DOL, reasonably enough, takes the stance that these are plan assets. However, they show a rare flash of common sense when they sugggest that in certain circumstances where the cost to allocte and distribute is too high, that it might be appropriate for the fiduciary to refuse to accept the check.

http://www.dol.gov/ebsa/regs/fab_2006-1.html

Thanks, Belgarath. That is useful to know the DoL's guidance, and something that does pop up fairly frequently with terminated plans.