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ARTICLE · 23 NOVEMBER 2020

Getting Rid Of Missing Participant Account Balances

Chamberlain, Hrdlicka, White, Williams & Aughtry
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The DOL and IRS used to not like plan fiduciaries getting rid of their missing participants via transfers to unclaimed funds and withholding to the IRS.

United StatesEmployment and HR
Joshua A. Sutin
Joshua A. Sutin

In 2019, the Department of Labor ("DOL") received recommendations from the ERISA Advisory Council to permit fiduciaries of qualified plans to allow uncashed checks of missing participants to be transferred to state unclaimed property funds. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2019-eac-voluntary-transfers-to-state-programs.pdf

Now, the IRS is making sure employer's withhold taxes from those uncashed checks. See Revenue Ruling 2020-24, 2020-45 IRB. https://www.irs.gov/pub/irs-drop/rr-20-24.pdf

The DOL and IRS used to not like plan fiduciaries getting rid of their missing participants via transfers to unclaimed funds and withholding to the IRS. Now , it seems that they are encouraging this as a method for cleaning up qualified plans with missing participants and un-distributable account balances.

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