Pixie Posted December 9, 2010 Posted December 9, 2010 My lost participant has been lost for several years. I have looked for him using a service for $50 and used the IRS letter forwarding several times with no luck. His investments are $2,300 and his outstanding loan is $3,400. I have been unable to default the loan because the platform will not allow us to unless his address is known. Penchecks will accept a default IRA rollover with a loan balance, but the total balance is over $5,000. Any ideas on how to proceed?
Lou S. Posted December 9, 2010 Posted December 9, 2010 Can you default the loan and send the 1099-R with the letter forwarding service? I'm not sure of any IRS or DOL rule that allows you to NOT default the loan and issue the 1099-R. edit - or what about using c/o the Plan Sponsor adress for the defaulted loan portion?
austin3515 Posted December 9, 2010 Posted December 9, 2010 How can you roll a participant loan into an IRA? And usually, the loan is offset at termination of employment, regardless of what the platform provider says (check the document). And one would hope that a 1099 has been issued by now... Austin Powers, CPA, QPA, ERPA
david rigby Posted December 10, 2010 Posted December 10, 2010 My lost participant has been lost for several years.Have you considered death, and checked the SSA online list of death records?Have you considered that the EE may have left the country? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
mbozek Posted December 10, 2010 Posted December 10, 2010 My lost participant has been lost for several years.Have you considered death, and checked the SSA online list of death records?Have you considered that the EE may have left the country? You also need to consider that the employee may have changed his/her identity and does not want to be located. Or the most logical reason- he is one the 47% of Americans who do not file an income tax return because they dont owe any taxes. Under IRC 408(e) the portion of an IRA that is used as security for a loan is deemed to be distributed. What are the tax consequences? mjb
Lou S. Posted December 10, 2010 Posted December 10, 2010 How can you roll a participant loan into an IRA?And usually, the loan is offset at termination of employment, regardless of what the platform provider says (check the document). And one would hope that a 1099 has been issued by now... I took it that they were going to issue a 1099-R for the loan and then roll the remainder since the account is under $5K. Agree that this probably should have been done awile ago and now VCP is probably best solution if his has been on the books for "years". I was just giving some ideas for how to physically default and issue 1099-R at whatever platform they are using if they don't have a good address for the participant.
david rigby Posted December 10, 2010 Posted December 10, 2010 Don't forget the SSA letter forwarding program: http://www.socialsecurity.gov/foia/html/ltrfwding.htm I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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