Stale checks

[Guest Tbrown]

we have had quite a few situations where a participant was cashed out and after 12 months, the check is voided because the participant never cashed it. Have any of you ever seen a circumstance where the money was redeposited into the plan, and then deposited and tracked in the plan's forfeiture account? It seems to me that simple answer here is the auto-IRA, but I've been asked to address this question.

Thanks,

Tim

[ETA Consulting LLC]

we have had quite a few situations where a participant was cashed out and after 12 months, the check is voided because the participant never cashed it. Have any of you ever seen a circumstance where the money was redeposited into the plan, and then deposited and tracked in the plan's forfeiture account?

Yep. Being a plan asset, it is used to benefit the participants of the plan. This was common prior to the Auto Rollover rules; and even common today in certain instances. The plan's document should support whatever you do.

It seems to me that simple answer here is the auto-IRA, but I've been asked to address this question.

Thanks,

Tim

When the check was cut, a 1099 R was issued. You would have to assume that the appropriate taxes were paid; as a failure to recognize the income would trigger a letter from the Underpayments team at the IRS. Typically, these amounts are so small (which is likely why the checks were never negotiated by the Participant). Even the IRA vehicles don't want the auto rollovers of account with $2 (or any insignificant amount).

There's some flexibility here.

Good Luck!

[Guest Distributor]

The whole staled dated/uncashed checks issue is complex, fascinating and of growing concern.

I have attached an article co-written by the president of our firm.

We can definitely help deal with these situations.

Uncashed Checks: The Billion Dollar Question?

Michael Jorgensen

PenChecks, Inc

800-541-3938 ext 841

[Guest Tbrown]

The whole staled dated/uncashed checks issue is complex, fascinating and of growing concern.

I have attached an article co-written by the president of our firm.

Enjoy!

Uncashed Checks: The Billion Dollar Question?

Michael Jorgensen

800-541-3938 ext 841

That was a great read. Thank you both for your input.

Tim