Default IRA Custodians

As many of you run into, we sometimes have on-going plans with former employee participants that cannot be located.

I believe the rule is as follows:

1. For on-going plans - after a diligent search, the plan can distribute a former employee's vested benefit to a default IRA Custodian, but only if it is $5,000 or less.

2. For Terminated plans - (non pbgc plans) after a diligent search, the plan can distribute a participant's benefit to a default IRA custodian no matter how large the participant's benefit is.

Anyone disagree with this?

Thanks.

For terminated plans you can only distribute to IRA if the Plan is not subject to the J&S rules if over $5K, otherwise you need to purchase an annuity, unless you qualify to turn it over to the PBGC.