Death of Participant

[Earl]

Participant dies.

No spouse, no kids, Mother's cell phone is disconnect and have no address for her.

Plan is 401k and SH only.

I think we could forfeit but can't use toward the SH, I believe, so reallocation as PS would create tiny balances and blow the TH exemption creating a required company contribution.

Is only thing to do amend plan to pay fees from plan and use it to pay me?

If it is more than one year's fee can you hold it in suspense (I think no but not sure if specify use to pay fees)?

Thanks

[MoJo]

I assume there is no beneficiary designation on file naming someone else to receive the benefits? Absent that, the money should be distributed pursuant to the terms of the plan (which means it probably goes to the estate of the decedent). No estate? Someone will have to open one. From there, who gets the money is determined under the state's laws (and at least gets the money out of the plan and out of your hair). Absent that, what does the plan provide with respect to "lost participants or beneficiaries"?

[Earl]

I forgot - no beneficiary. No estate - "He has nothing but an apartment".

I hate to give to the state. But if I have to I guess I have to.

Document says we can forfeit but that seems to screw the sponsor. Maybe he deserves to be screwed since he didn't keep Mom's address. Presumably (not cretain) she is alive but do not have an address or SS# for a search.

Maybe when she gets word of death she will turn up.

[Bird]

He has an estate; it's the plan proceeds. Eventually you might have to forfeit it but I'd give it at least a year before doing anything.

[Earl]

"He has an estate; it's the plan proceeds. "

Understood.

Thank you

[austin3515]

I say use it towards the SHNEC. My lord, it was just a Q&A where they said that!!

(assuming your document with a favorable OL/DL allows it--ours does)

[Earl]

You know, it does have a "Safe harbor-top-heavy exempt fail-safe" section that says "blah, blah, allocate forfeitures blah, blah, first to reduce Safe Harbor Contributions".

I guess I forgot the first rule, CTFD. (check the freakin' document)

Cool.

[GBurns]

What makes it a forfeiture?

[GMK]

Before you forfeit, check what the Plan Doc says about distributing a benefit upon the death of a participant. Make a reasonable search for Mom, if the Plan Doc indicates that she is the legit beneficiary. If she's not a beneficiary or you really can't find her, then, as Mojo suggests, put it in his estate and let the state hold it.

If you forfeit, what happens if Mom shows up next year claiming her benefit?

[Earl]

GMK - the plan says the money is owed and comes from forfeitures and contributions and then AA has an elected provision to use earnings (wouldn't elect in a self-directed account plan).

GBurns - the plan document says forf Participant or Beneficiary money if lost. Details what is required to be a lost participant.