Distribution made from corporate account

So, here's the question - plan Trustee liquidates funds to pay a terminated participant. Doesn't open a trust checking account - deposits the funds to corporate account, and SAME day sends check to participant, or directly to the participant.

Now, I know this is a no-no, but it happened. Question is if this in any way invalidates a rollover, since it technically didn't come from a "trust" account?

13 minutes ago, Belgarath said:

Question is if this in any way invalidates a rollover, since it technically didn't come from a "trust" account?

I vote no.

Thanks. Thjat was my thought. Could theoretically be PT issues, although hard to see what the penalty amount could be if it is "corrected" (i.e. distributed) same day.

I have seen many instances over the years where the plan's check writing function passed through the corporate account - not a best practice but in and of itself probably not a compliance problem BUT, maybe an issue if there is any float, especially if checks not cashed timely. If checking account does not pay interest, then I think OK.

The important issues are tax withholding and remitting (if/when required) and reporting - running through a corporate account does not change any aspects of those requirements.

I recall years ago the IRS stating that if there is a trail and timing you as you have presented it is a non-issue.

I agree with all the above. I think the legal theory that supports it is agency. The employer is acting merely as plan's agent.