There are millions of dollars in uncashed checks out there. Here is what typically occurs: An employee participant leaves a firm, and the plan sponsor approves the distribution of their account; the plan trustee or custodian sells the investment and puts the proceeds in an omnibus checking account, then sends out the check to the plan participant. But if the check remains uncashed for a period of time, the question may arise regarding who can rightfully claim that money. In this case, it’s still the plan’s asset.
Plan sponsors need to have a process in place to periodically check in with the custodian to identify any uncashed checks and determine what to do about them; this should be done on at least an annual basis. Should the former employee be contacted again? Should the money be taken back into the plan and the account reinstated? Plan sponsors can post information on unclaimed retirement benefits in an online national registry.
But plan sponsors should be aware that the U.S. Department of Labor believes that those uncashed checks remain plan assets, so the sponsor has a fiduciary obligation to address them.