vCP - notification issue

[Guest Pitch78]

Maybe there is a simple answer, but, if so, I cannot find it.

Excluded employee that is a former employee.

Does the money they are owed go into the plan and then you notify them that they can take the money out or roll it over, or do you simply send them a check and notify them that they have 60 days to roll over or the distribution will be suject to tax?

[jstorch]

^{When I researched this, I was not able to find anything allowing you to send the money directly to the participant, so we put it in to the plan and notified them. If anyone is aware of authority saying you can send the funds directly to the participant, I'd appreciate the citation to it.}

[Guest Pitch78]

Thanks Storch. Such a simple question (like many questions) with no definitive answer either way. Putting it in the plan with notification makes sense for many reasons. But does add to the paperwork.

[K2retire]

Thanks Storch. Such a simple question (like many questions) with no definitive answer either way. Putting it in the plan with notification makes sense for many reasons. But does add to the paperwork.

It adds to the paperwork that is available to protect the plan sponsor should anyone challenge whether or not they made the appropriate contribution.

[Guest Pitch78]

Thanks K2retire.

[BG5150]

If it's under $200, could you put it into the trust and then just have the custodian send out the proceeds? No withholding to make up if they want to put it into an IRA.

[Guest Pitch78]

Thanks BG. This is part of a VCP correction and there were over 1,000 employees of various amounts.

[BG5150]

Still, for those under $200, I'd just send them a check with a letter saying you have 60 days to roll this over or it's going to be taxed. That will save time and effort of having to send out forms, waiting for nothing to come back and then send out the checks.