Settlement Check in Class Action

[CLE401kGuy]

A couple of scenarios I'm wondering what people have opinions about:

A class action settles so checks are being doled out to those who participate in the class action:

Scenario 1: A plan of the employer's was terminated and fully paid out, there is a surviving plan into which many participants rolled funds - accepted to endorse that check into the surviving plan?

Here, I feel it would be acceptable to deposit the check into the surviving plan

Scenario 2: The employer (a doctor group) was absorbed into the nearby hospital, their plan was terminated and fully paid out - who or what entity is entitled to the settlement check

On this one, I'm not sure - can the check be cashed by any entity?

[chc93]

In one case that we had where the company went into bankruptcy, the bankrutpcy trustee decided to return the settlement checks. Used DOL Field Assistance Bulletin 2006-1 for some guidance... which basically mentioned using prudence, weighing cost and ultimate benefit. Checks totalled about $1,500... plan assets that were distributed were about $17 million to 400+ participants. Checks received about a year after all plan assets were distributed.

[mbozek]

#1How are proceeds of check to be allocated among the participants in the terminated plan? Under IRS rules only amounts that can be deposited are funds of plan participants. Can plan establish accounts for employees who did not rollover to the new plan?

For # 2 need to read the merger agreement between the Dr goup and hospital to determine if Hospital has any dibs on surplus assets of Dr group.

Q- is who is successor in interest of Dr group who has ownership of the check? If Dr group has liquidated who has legal authority to endorse/ cash the check on behalf of Plan and how will it be divided up and taxes withheld/reported? Does plan still maintain a checking account?