The Cash-out Limit change is a no brainer

For over 25 years, the involuntary cash-out limit was $5,000. Now, we have an increase. An increase that is optional, but you should enforce it as a plan sponsor.

These mandatory cash-out distributions can be paid out without the consent of the participant or his/her spouse, if applicable. The statutory limit since 1997, has been up to $5,000, but Section 304 of the SECURE Act 2.0 increased the statutory limit to $7,000, effective starting January 2024.

This limit, allows for mandatory cash-outs for former participants, whether they are missing or not. It is a great mechanism for plan sponsors to flush out small account balances. So you should adopt the increased limit.

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