Plan Participant Refuses Distribution

[pgold]

Profit sharing plan is terminated as of 10/1/2016. All plan participants received their distribution except one. His account balance is $20,000.

The participant refuses to sign distribution forms or receive distribution because he doesn't want any assets in his name. He can not be reasoned with.

The plan sponsor wants to close out the plan by 12/31/2016 and file a final return.

Is there any way to resolve this situation?

[ESOP Guy]

Yes plan termination is one of the few times you can force everyone out. The plan amendment terminating the plan hopefully allows for it. Some people might make the case the amendment doesn't have to say so. The law is clear you can do it. But in the end you can force the money to an IRA set up in this person's name. They can't hold the plan hostage.

[RatherBeGolfing]

Yes, but answer depends on circumstances.

Short answer, if the plan does not 1) offer annuities and 2) the employer (or related ER if a CG) does not offer any other DC plans, you can distribute without consent even if the account balance exceeds the plan's cash out limit.

Even if you don't fit that answer there are ways to do it, just not as simple.

[L_Ann_F]

We use a third party to Rollover the money to. Not sure I can post names here, so I PM'd you.

[shERPA]

1.411(a)-11(e)(1) is the authority to which ESOP Guy and RatherBeGolfing refer.

[Lou S.]

If J&S plan buy him an annuity.

If not a J&S Plan roll him to an IRA and send him their contact info.

[david rigby]

If the distribution form(s) (ie, the form already sent to participant) discloses the IRA, then you (probably) don't have to give participant any additional notice. But if the distrib. form does not mention the IRA default, additional communication might be advisable (even if not required). There might be value in doing so, because it may spur the participant to action.