Plan Termination - uncashed checks

[PFranckowiak]

Company was bought out and the Plan is terminating. All checks have been issued. Some participants elected to transfer money to their new ER's plan. New ER HR department has been sitting on some checks since February waiting for the participant to complete an election form for the Rollover money. The Checks are only good for 90 days.

After 90 days the checks would need to be reissued and incur a fee for reissue that would be charged to the plan participant and the Cycle would repeat.

If they don't get this resolved can we just send the participants to a Rollover IRA or are we stuck in this loop until they complete the form the new ER says they are missing?

We just asked about a default fund or maybe the participants already filled election forms for their deferrals, but in any case they aren't accepting the checks.

The HR person seems not too concerned that they have held the checks for two months.

Any suggestions on what to do to get the money out of the plan.

[Lou S.]

It's a fiduciary violation for the new plan to sit of the checks. If the participant's haven't made election the Trustee needs to invest the money for them or put them into the plan's default fund. But you probably know that.

That said I have no clue what to tell you. Maybe a cashiers check?

[PFranckowiak]

That's where I was going - I think its a fiduciary violation too, but sitting where I am, not much we can do except point it out to them. Not sure where to get any language to see how long they can hold on to a check before doing something with it. Not sure if the new plan has a default fund. If it doesn't maybe they need to add it.

[Lou S.]

I don't know if there are specific rules relating to rollover checks but my guess on DOL investment standards is they would simply extend the current rule for investing deferrals and loan payments. I'm pretty sure the DOL would find 2 months an unreasonable delay.

But the investment issue as you correctly point out is the receiving plan issue, not yours. You are in the difficult position of not really being able to close the trust.

[david rigby]

Get the boss of the "HR person" on the phone, and say the words "fiduciary violation" slowly and clearly.