terminated participant resurfaces

[thepensionmaven]

We terminated a DB plan, that was effective 1986 and froze all benefits as of 1/1/92 for all participants, in 2015.  

Now, in 2019, the participant comes forward asking about the plan.  She was terminated in 1996.Plan sponsor send out notices, certified, return receipt in 1996-7-8.  All came back unable to forward. 

All assets had been distributed and Final 5500-SF as well as Post Distribution Certification have been filed, showing the plan had $0 as of 12/31/2015.

What should be done here??

[ESOP Guy]

Not a DB plan guy I admit.   But you seem to not answer the question that I think is universal to all plans. 

At the time of the plan termination did the plan think she was due a benefit?

If so, what was done with her benefit?  If not, do you have any idea why not?  

It would seem like that ought to be the starting place.  

[CuseFan]

Exactly. This is a missing participant. PBGC covered, I assume, because you did a post-dsitrib cert, so the benefit should have been turned over to the PBGC.  It could not be forfeited just because you couldn't find the person, except maybe if this person went past NRD and benefits were due before plan termination and you couldn't find (if plan terms allow) - but even then I think DOL is very opinionated that you can't really do that.

[david rigby]

Good points.  When investigating this EE, look out for an assumption the person was deceased (and therefore no benefit due).  If such error was made, the PBGC will have no record (ie, money) for this person, and the sponsor might have to amend its PBGC filing to include the missing participant.  

[thepensionmaven]

Apparently this individual was fogotten,  attempting to locate original plan.   At time participant terminated, the present value of her accrued benefit was under $1000 (amt was $595).  Prior TPA took the position since she never returned an election, her benefit be forfeited. 

Client received call from this individual asking if she was due any money. 

Perhaps I should also post on the DB Board? 

[loserson]

7 hours ago, thepensionmaven said:

Prior TPA took the position since she never returned an election, her benefit be forfeited. 

uh oh

Are you sure they didn't just do a cashout?

If it really was just a de minimis benefit, I think the best route might be to calculate her benefit, pay her out in a lump (if permitted by plan), and amend the filings as necessary.  And make sure somebody will send a 1099 next January.

[rocknrolls2]

Two things come to mind in this situation: 1) were participants whose lump sum value was beneath a certain threshold set by law routinely cashed out at termination of employment? If so, you may be able to rely on that as a plan practice even if you cannot locate the participant's information. 2) it may be worth while to search the PBGC's missing participant web site to see if they have any information about a benefit for this person. if yhey do you can simply direct the participant to the PBGC.