Settlement Fees Received after Plan Termination -HELP

[Guest jvgatty]

Hi All.

Hopefully some of you are still around and haven't taken off for the holiday weekend already. Because I have a real interesting situation. I have a prior PS plan that is 100% terminated, kaput, dead! Plan was terminated, all benefits distributed, no more filings required. Recently, a class action settlement occured with a financial provider which the Plan previously used. The Plan received a class action settlement check for a couple of thousand dollar (not significant money). What to do? I don't even have a plan to control allocation. However it is clear that this money would have been allocated to current participants if the money had been received when the Plan was active.

I appreciate any suggestions (and code cites) as to how to handle this situation.

Thanks!

[david rigby]

Lots of prior examples of that. Try the Search feature.

A couple of examples, found using keyword "settlement":

http://benefitslink.com/boards/index.php?showtopic=42109

http://benefitslink.com/boards/index.php?showtopic=42542

You might find other useful keywords.

[Guest jvgatty]

I did search and only came up with one that had very few replies and little direction. Maybe I am search challenged?

[Guest jvgatty]

Thanks so much for the links. All I was coming up with were unallocated forfeiture after termination discussions. I have an even better quirk with this situation - the company has also terminated. So not only do I not have a plan, I do not have a former plan sponsor company. Documents have not been retained since the termination of the company approximately 5 years ago. Going to see if I can track down prior accountant and administrator and see if they have any records.

What a fun way to spend the holiday weekend!

[rcline46]

Read the directions that came with the checks. I think you can refuse the checks as un-distributable.

[Ron Snyder]

Hopefully some of you are still around and haven't taken off for the holiday weekend already. Because I have a real interesting situation. I have a prior PS plan that is 100% terminated, kaput, dead! Plan was terminated, all benefits distributed, no more filings required. Recently, a class action settlement occured with a financial provider which the Plan previously used. The Plan received a class action settlement check for a couple of thousand dollar (not significant money). What to do? I don't even have a plan to control allocation. However it is clear that this money would have been allocated to current participants if the money had been received when the Plan was active.

Can you say "party fund". It's not enough to go to Brazil.

Seriously, why not do a simple calculation of the breakdown by participant and send the check to the state escheat office with the identification of the participant's name, address and social security no.

Or, in the alternative, you might go to an involuntary rollover providers and set up involuntary rollovers for each of the participants.

[Bill Presson]

Hopefully some of you are still around and haven't taken off for the holiday weekend already. Because I have a real interesting situation. I have a prior PS plan that is 100% terminated, kaput, dead! Plan was terminated, all benefits distributed, no more filings required. Recently, a class action settlement occured with a financial provider which the Plan previously used. The Plan received a class action settlement check for a couple of thousand dollar (not significant money). What to do? I don't even have a plan to control allocation. However it is clear that this money would have been allocated to current participants if the money had been received when the Plan was active.

Can you say "party fund". It's not enough to go to Brazil.

Seriously, why not do a simple calculation of the breakdown by participant and send the check to the state escheat office with the identification of the participant's name, address and social security no.

Or, in the alternative, you might go to an involuntary rollover providers and set up involuntary rollovers for each of the participants.

And who pays him for this wonderful work?

[Peter Gulia]

If your service contract with the plan expired or became terminated and your business is not the plan's administrator, trustee, or other fiduciary, what (if anything) provides you any authority or imposes a duty or obligation?

[Guest jvgatty]

We are the atty's for the former owner of the Plan sponsor, trustee of the Plan and also prior plan participant. I was leaning towards finding a final year allocation break down, forwarding the money to participants if under de minimis amount for withholding and sending it on to the state eschet funds if above the de minimis amount. However, I may offer the the trustee of the option to refuse the check. Not sure since the plan is terminated whether we could take fees as plan expenses out of the the settlement amount for the work to detrimine allocations.

Any thoughts?

Thanks for all the responses. Very helpful.

[david rigby]

I'll accept it.

[Guest jims]

We had similar situation for one of our plans that had terminated, but it was demutualization proceeds. Even though plan had been terminated about 5 years prior, we still had records and documents. It was concluded these were excess assets to be allocated to participants, in accordance with plan document rules. We then did work to track down participants to get rollover elections and then made payments. The plan allowed for admin expenses which reduced the amounts, but people still got hundreds and thousands of dollars. Settlements and demutualization proceeds are not the same, but with the similarities you may be able to draw a number of helpful conclusions with the available writings on administering demutualizations.

[david rigby]

... demutualization ...

Another excellent choice for a search word.

[PensionPro]

Similar situation: plan terminated and trust zeroed out. TPA discovers late deposits. In order to correct late 401(k) deposits, plan SHOULD pay dollar or two late interests to a number of participants in this large plan. It does not seem to be worth the cost of opening accounts, processing distributions, and issuing 1099-Rs.

Any suggestions and opinions out there? Thanks.