Rollover Uncashed Checks into IRAs

Work with us 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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Our Uncashed Check Solution

Our 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
  • Comprehensive search efforts to locate the participant through multiple channels
  • Send a welcome kit, annual statement and Form 5498 to accountholder

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

We've worked on thousands of 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.

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Our Automatic Rollover IRA Solution

We provide solutions to accommodate distributions from ongoing, terminated or abandoned defined contribution plans. Our IRAs are designed to comply with the Safe Harbor regulations, Section 657(c) of the Economic Growth and Tax Relief Reconciliation Act of 2001. We have provided the following benefits to more than 60,000 Plan Sponsors:

  • Additional investment options for accountholders
  • Low annual fee for the accountholder with no set-up fee
  • No cost to the provider or plan sponsor
  • Fully compliant with Safe Harbor regulations and EGTRRA

Our 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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