IRA transfer from 401(k) Plan when participant can't be found

I have a terminated 401(k) that I am trying to remove all of the participants monies from before the end of this year. Several of the participants can't be located and/or won't return the distribution paperwork to the plan sponsor. It's my impression that the plan sponsor can establish individual IRA's for each of these individual's so that their monies can be removed from the plan trust and we can terminate the trust before the end of this year. Question: does anyone know of a financial institution that would establish individual IRA's without the participants signature?

Thanks

There are quite a few institutions that will establish cashout IRAs for missing/non responsive participants and will allow you to exceed the normal $5,000 limit if the Plan is terminating. Assuming you've done the DOL due diligence search per DOL regs.

Alternatively you can use the PBGC program for terminating DC plans that was setup a few years ago. The PBGC program though is all or none. That is you need to turn over all missing/non-responsive participants or you can't use their program. There are specific requirements for using the program that are similar to the DOL rules.

Most recently I've used Pencheck for a terminating 401(k) Plan that had a few missing/non-responsive.

I think Millienium Trust is another who will do it. But those are by no means the only two.

If you have SSNs for the missing participants, there are low-cost search services that have a very high success rate in locating the them (~99%), and you will get a response in 2-3 days.  The fee is reasonable and you can charge the participant's account for the cost of the search.  (BL Message me if you want the name of the company we use.)

If the participants who will not return the paperwork are still employed, then the company should be able to convince them to turn in the paperwork.  If suggesting cooperation to a participant doesn't get a response, then a harder line is the company tells the participant that failing to turn in the paperwork is going cost everyone including the company and them money, and jeopardize the timely closing of the plan which will be significantly frowned upon.

If any active or terminated participant still will not return the paperwork, then you can tell them if you don't get the paperwork within xx number of days, you are going to turn over their account to the government (PBGC) and they can deal with the government when then finally want to get paid.  And by the way, the government will not invest the money.  If that doesn't scare them enough, imagine their surprise when you do in fact use the PBGC program and tell them where they can find their account.

None of this is complicated, costly, or overly time-consuming.

Millennium Trust will set up the IRAs.  Millennium Trust has or is changing their name but you should still be able to Google them.  They have a pretty simple process which is one of the reasons they have become so popular to send lost participant money to them. 

PBI is a good search firm but I don't know if the full search service can be done by year end.   Their process includes sending confirmation letters to the person. 

https://www.pbinfo.com/

4 hours ago, ESOP Guy said:

Millennium Trust has or is changing their name but you should still be able to Google them.

New name is Inspira Financial.  Website as of now is still at mtrustcompany.com