The Plan Sponsor can authorize mandatory cash out. (Available only for accounts with balances of less than $1,000.)
Follow the steps identified in the "Processing" section of the Participant Separation from Service Checklist.
If the participant with a vested balance of less than $1,000 fails to return the properly authorized Separation from Service Distribution Authorization Form by the designated return date:
- Complete Section 2 of the Separation from Service Distribution Authorization Form.
- Complete Section 3 of the Separation from Service Distribution Authorization Form by marking the "Upon the expiration of 60 days ..." bubble.
- Complete Section 6 of the Separation from Service Distribution Authorization Form. Mark the "Participant Declines" box. Sign and date the form in this section.
- Forward the fully executed Separation from Service Distribution Authorization Form to Envoy TPA and Recordkeeping, Inc. at PlanSponsor@EnvoyFinancial.com.
- Save a copy of the form in the Participant's Human Resource folder. In the event of a Plan audit, a copy of the form will be needed.
After approximately 60 days, if the Participant retains a vested balance that does not exceed $1000, Envoy will process a cash distribution to the Participant of his/her account balance, less the Participant distribution expense.
A Form 1099-R will be mailed to the Participant within two weeks of the distribution. The Plan Sponsor directed Cash Out is typically a taxable event for the Participant.