Forfeiture Account for Terminated Plan

Good morning everyone!  Have an old client that had terminated the Plan back in 2017 (all participants had been paid out).  The problem is that they left a Forfeiture Account open, that remains open today.

Obviously we'll need to file Form 5500 for the back years, since there was still money.  The question is what should be done with that Forfeiture money?  There will be some expenses, due to the required filings, but how should the rest be allocated?  Does it need to go to the participants who had previously been paid out?  What if those participants can't be found?  The owner, who was one of the three participants, has unfortunately passed away.

Thanks everyone!

On 12/21/2022 at 10:12 AM, metsfan026 said:

Does it need to go to the participants who had previously been paid out? 

In theory, yes.

On 12/21/2022 at 10:12 AM, metsfan026 said:

What if those participants can't be found?

Yeah, that's a problem. Try hard to find them. If enough money is involved, consider filing under VCP to get some sort of blessing for what you do, although, again in theory that does not bind the participants under ERISA.

Depending on the amounts and if the plan allows forfeitures to pay plan expenses will the cost of filing the back 5500s eat up the funds?

That might be a lot easier than finding the people.

metsfan026:

If the former owner of the employer died, which officer of the employer (which we imagine is the plan’s administrator) has authority to engage your services?

Likewise, if the decedent served as the plan’s trustee, is there a successor trustee who can pay your fees?

On 12/28/2022 at 5:29 PM, Peter Gulia said:

metsfan026:

If the former owner of the employer died, which officer of the employer (which we imagine is the plan’s administrator) has authority to engage your services?

Likewise, if the decedent served as the plan’s trustee, is there a successor trustee who can pay your fees?

Yes, there was a successor Trustee in place.

On 12/28/2022 at 4:34 PM, ESOP Guy said:

Depending on the amounts and if the plan allows forfeitures to pay plan expenses will the cost of filing the back 5500s eat up the funds?

That might be a lot easier than finding the people.

Unfortunately the balance is a little bit too big to just have it pay our fees.  There will still be additional funds remaining

metsfan026, Is there enough to warrant creating IRAs for the participants you can't locate?