Missing Participant in Active Plan (DB or DC)

[JButtrick]

Maybe this is so obvious that no one has bothered to write about it. At least I haven't been able to find anything.

Am I correct in my assumption that in an ongoing plan, a missing terminated participant with a Lump Sum value of over $5,000 cannot be "cashed out" to a missing participant IRA?

If the LS is $5,000 or less, it is OK to set up a missing participant IRA.

Other more obvious situations are:

- If a DC plan is terminating, a missing participant IRA is the way to go.

- If a PBGC DB plan is terminating, the benefit goes to the PBGC.

[david rigby]

Have you checked the plan provisions?

[JButtrick]

This was intended to be a non-plan specific question as it has come up more than once. The Plan sponsors want to get old missing terminees out of the plan. Especially now with PBGC premiums being what they are.

Let's assume that the plan allows Lump Sums and has a $5,000 cash out provision.

My feeling is that the fact that the participant is missing doesn't change the rules - You still need an election to cash out anyone with a balance of $5,000 or more unless the plan is termianting

[Lou S.]

If the participant has reached the later of age 62 or NRA in the plan you can also cash them out or purchase an annuity for them in annuity plans. Otherwise I agree with your assessment in general for on going plans under current law.