Rollover Uncashed Checks into IRAs

Inspira will work with you to roll your Uncashed checks into IRAs to reduce your costs while ensuring your compliance

The Uncashed Check Dilemma

Every service provider issuing checks to individuals from retirement plans has issues with those checks not being cashed in a timely manner, if at all. In 2011, the Department of Labor estimated that each year $15 million in retirement plan distribution checks go uncashed, and they all present a series of problems for plan providers:

  • Once cut, is the check considered a plan asset?
  • Check with designated plan beneficiary
  • Employ an “acceptable distribution” option

The problem is typically greater when the check is sent to terminated participants with vested balances of less than $1,000. These individuals have not responded to notices or requests to affirmatively direct what to do with their funds, often because they are “lost participants” with no good mailing addresses available.

READ The Uncashed Check Dilemma

What to do with Uncashed Checks?

Unfortunately, there is no definitive guidance from either the DOL or IRS on what to do with funds for uncashed checks or the steps that are required to resolve the problem. The issue was most recently reviewed during a fall 2013 ERISA Advisory Committee meeting to address:

  • Requirements for searching for individuals with uncashed checks
  • Options for dealing with the funds if a person cannot be located
  • The extent to which fees can be charged to the participant
  • Recovering tax withholding requirements
  • Other types of funding requirements

While no concrete guidance came out of the 2013 meeting, we do know a few things for sure: 1) Uncashed check assets DO remain plan assets; 2) Escheatment IS NOT an option for uncashed check assets in active plans; and 3) Rollover IRAs are a viable option for active plans with mandatory cash out provisions

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The Inspira Uncashed Check Solution

Inspira has a solution for uncashed and stale-dated checks that will keep you compliant, reduce your costs, and ensure a positive outcome for the missing participant. We will help you create a documented uncashed check procedure that alleviates your existing problem and all but eliminates uncashed checks in the future:

  • Rollover uncashed and stale-dated checks into IRAs
  • Invest IRA assets into a default investment with a GMIR of 1.00%
  • Comprehensive search efforts to locate the participant through multiple channels
  • Send a welcome kit, annual statement and Form 5498 to accountholder

Inspira’s uncashed check solution features a low annual fee that, when paired with the Lincoln Fixed Account as the default investment, provides accountholders with the lowest annual accountholder expense in the industry. Once an accountholder is located and notified, they can withdraw their funds online, continue contributing to the IRA and diversify, or roll the account into another retirement vehicle.

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Additional Services offered by Inspira

Complete Plan Termination Solution

Inspira has worked on more than 600 Retirement Plan Terminations, including 401(k), 403(b) and 401(a) terminations. We have a proven process for rolling over accounts remaining in a terminated or abandoned plan, including those with balances of more than $5,000:

  • Fully compliant with DOL Field Assistance Bulletins 2004-02 and 2014-01
  • Start-to-finish consultation, including pre-termination
  • Assistance with participant notifications, forms and 402(f) notice
  • Partnership with Ascensus Trust to provide QTA services
  • Pre-termination participant searches to ensure higher success rate

Based on our experience, a typical plan termination takes 2-to-3 months. If your firm has already sent the appropriate notifications, that timeline can be cut down significantly.

Learn More About Inspira's Plan Termination Solution

The Inspira Automatic Rollover IRA Solution

Inspira is the only default IRA provider that gives clients choice in a default investment, including the Lincoln Fixed Account with a GMIR of 1.00%. We are also the only IRA provider with a system designed to encourage diversification by Automatic Rollover accountholders. Inspira has provided the following benefits to more than 7,000 Plan Sponsors:

  • Highest-returning default fund in the industry (1.00% GMIR)
  • 30-plus mutual funds and TDFs screened by outside advisory firm
  • Lowest net accountholder expense of any automatic rollover provider
  • No cost to the provider or plan sponsor
  • Fully compliant with Safe Harbor regulations and EGTRRA

Inspira’s solution is designed to give the account holder all of the benefits of a voluntary rollover, despite their status as a forced out client. We keep the account’s best interest at the forefront.

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