Plan Sponsor Directed Cash Out

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:

  1. Complete Section 2 of the Separation from Service Distribution Authorization Form.
  2. Complete Section 3 of the Separation from Service Distribution Authorization Form by marking the "Upon the expiration of 60 days ..." bubble.
  3. Complete Section 6 of the Separation from Service Distribution Authorization Form. Mark the "Participant Declines" box. Sign and date the form in this section.
  4. Forward the fully executed Separation from Service Distribution Authorization Form to Envoy TPA and Recordkeeping, Inc. at PlanSponsor@EnvoyFinancial.com.
  5. 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.