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Terminating DB and 403(b) plans - default IRA provider recommendations


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Posted

Client is terminating a DB and 403(b) plan and need a default IRA provider that would accept balances from both plans for participants who do not respond.

Can anybody recommend some providers?

Thank you.

Posted

Note, when terminating a DB plan, you cannot move the monies for missing participants into an IRA. The PBGC will not accept this due to the IRA's fees. They will need to go through the PBGC's missing participant program.

Posted

Penchecks Trust, http://www.penchecks.com/ also does missing participant IRAs, will search for the missing participants and enter their data in their free online database, http://www.unclaimedretirementbenefits.com.

Before paying to an IRA, the plan sponsor needs to make a diligent effort to locate participants, simply "not responding" is not sufficient before defaulting to a IRA. See DOL FAB 2004-2.

I also echo the PBGC caution expressed above. Years ago we did IRAs for two small DB benefits in a PBGC-covered plan. PBGC required us to send to them instead.

I carry stuff uphill for others who get all the glory.

Posted

My understanding:

Under $5,000, OK to put proceeds into default IRA. Over $5,000, pay to PBGC as missing participants.

Participants under $5,000 whose whereabouts are known but who do not respond = OK to put in default IRA. Ditto for such participants if a "diligent search" has been conducted (whatever that means in the Internet Age).

Always check with your actuary first!

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