Yesterday, I testified on behalf of ERIC before The ERISA Advisory Council on the legal and practical concerns surrounding uncashed checks and state escheatment.
The Council appears to be looking at this issue to determine whether voluntary escheatment of uncashed checks is a viable solution for plan sponsors and, if so, what additional guidance the Department of Labor (DOL) needs to provide.
All of the witnesses from the retirement community, including ERIC, testified that plan sponsors rarely escheat uncashed checks from retirement plans due to legal and practical obstacles. There was also agreement that additional guidance from the DOL to clarify plan sponsor obligations would be helpful. The solutions to this issue, however, were varied.
A number of state representatives testified and provided information on the state escheatment process and the similarities and differences between the programs. All of the state representatives – some directly and some indirectly – suggested escheatment to the state of uncashed checks as the most viable solution for plan sponsors.
The business community pushed back on this assertion highlighting legal uncertainties and the practical burdens of complying with 50 different state rules. However, most of the witnesses agreed that with appropriate guidance and changes that would allow for uniform administration, plan sponsors would consider voluntary state escheatment of uncashed checks. In addition, suggestions were made to send uncashed/unclaimed funds to a private clearinghouse or to the PBGC as an expansion of its missing participant program for terminated plans.
The Council will have another meeting on this topic in August. If there are additional ideas or concerns that you would like for ERIC to share, please do not hesitate to contact me.
Article by Aliya Robinson, Senior Vice President of Retirement Policy