Beneficiary Unknown

[MarZDoates]

We are the TPA for a (takeover) 401(k) plan where a participant terminated employment several years ago (>5 years). She has a very small account balance left in the plan <$100. We notified the employer that they could distribute to her in a lump sum without her consent. It has now come to our attention that this participant is deceased. They can't locate a copy of her beneficiary designation form (and she was not married). What do we do with the money???

[ETA Consulting LLC]

Let's look at it like this. Chances are the deceased former participant had a former balance and took a distribution while a trailing contribution hit the plan (or something to create such a small balance). After a reasonable search (which you've apparently done) and given the relatively small balance, I would forfeit it to the plan. I would maintain elaborate documentation on why it was done (to show that it wasn't merely an arbitrary act to cut corners, but instead a practical solution to an administrative issue involving such a small amount). Obviously, the case would be different if the balance was $1 million but the simple fact is that it's not.

Good Luck!

[david rigby]

Try online search for an obituary. That might turn up a sibling or other relative.

BTW, if no beneficiary designation, check the plan for a default definition.

[mbozek]

We are the TPA for a (takeover) 401(k) plan where a participant terminated employment several years ago (>5 years). She has a very small account balance left in the plan <$100. We notified the employer that they could distribute to her in a lump sum without her consent. It has now come to our attention that this participant is deceased. They can't locate a copy of her beneficiary designation form (and she was not married). What do we do with the money???

The question is how much time/expense do you want to put into paying out such a small amount. If you know the state where she resided see if you can get a copy of her death certificate which will show who her next of kin is. Otherwise the plan should forfeit the funds in the interest of administrative efficiency.