Managing uncashed retirement checks may be considered a nuisance by plan administrators. Nevertheless, the employer still has fiduciary responsibility when a former employee fails to cash their distribution. Search efforts to locate a missing plan participant consume time and money and may fail to locate the participant. Likewise, going through the process of turning over dormant accounts to the state can also consume time and resources.
Decrease the burden of uncashed checks by:
- Discussing with 'terminating' employees during the exit interview the options for their retirement plan. Employees may forget they have a company-sponsored retirement plan, or they may not know how to manage it.
- Reminding departing employees that they can roll over their retirement assets into their new employer’s plan. Your plan’s service provider or the new employer can answer questions the former employee may have about the rollover process.
- Letting employees with an account balance of $1,000 or less know they should expect to receive a check in the mail after a certain amount of time.
- Having the employee verify their current address to where the check can be sent.
Remember, fiduciary responsibility and liability extends to terminated employees with assets in the plan. This responsibility includes delivery of all required distributions and all fiduciary prudence responsibilities. Stay in touch with this important group.
Source: Retirement Plan Advisory Group