Automatic IRA rollover

[Cynchbeast]

I know the automatic cash out and rollover rules get confusing, and to make matters worse, I just studied for and passed ERPA-SEE Part II, so now I have just enough knowledge.

Anyway, we have 401(k) with auto rollover limit at $5,000 and a LOT of terminated participants they have not been able to contact. I know participants with over $5,000 must be left in the plan. But my ERPA studies said that the automatic rollover can only be done before the later of age 62 or NRA (NRA per plan is 65). We have a couple participants who are already age 65.

But then the Adoption Agreement says something about involuntary cash-out above $5,000 is deferred until required beginning date.

I would appreciate any enlightenment that can be provided on the topic. Thanks.

[ETA Consulting LLC]

I'm going to beat David Rigby to the punch and recommend you read the document for your plan in question. When studying for the ERPA (or any other test), your being tested on your understanding of what the rules permit a plan to do. However, in many instances, it is up to the actual plan to adopt those rules. When it comes to 'not being able to locate a participant' who is not required to take a distribution from the plan, no problem exists with respect to a distribution. A plan "may be written" for force a participant out at the later of age 62 or NRA. Unless your plan actually forces those individuals how, then they really are not missing. Your date for a mandatory distribution would, then, become their RBD under the plan (typically at age 70 1/2).

Good Luck!