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The uncashed check fiasco


In the retirement plan industry, we have rules and we have guidelines on what to follow. However, there is one gray area that the Department of Labor (DOL) has absolutely no guidance: uncashed checks.


Uncashed checks are becoming a real issue, mainly because the DOL is focusing on missing participants. Not many plan sponsors balance their checkbooks, let alone the plan’s trust. Plan sponsors and their plan providers rarely make sure that distribution checks are cashed. If they’re not, what happens?


Until the DOL opines, there is no definitive answer on what to do with uncashed checks. While I prefer allowing for an automatic Roth Rollover IRA, some in the industry want to allow uncashed checks to escheat to the state. Until the DOL gives some guidance, what we should definitively do with uncashed checks will be a mystery.

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