Fiduciary forever?
Does a fiduciary have responsibility on a closed retirement plan ad infinitum? I recently was contacted by a former employee of 17 years ago on a plan that has been closed for 4 years in which I was only involved with for 2 years. There are still several people who have plan balances-the brokerage firm/investment bank who maintains their balances have either transferred those balances to ‘forced’ IRA’s or are otherwise in contact with/holding those fund balances indefinitely. Sometimes mailing campaigns are done, other times the funds end up with the state as forfeited funds. Other times-more often than not-the plan balances sit there until the employees get new employers, get professional financial advice or otherwise figure out they can setup their own plans and transfer/combine the funds. In some cases they have moved around, held hostage by dinosaurs on Antarticaor have been in jail so never received mailings about how to do these things at an appropriate time. Or they’ve died and their estates somehow also don’t know about their thousands, or in some cases millions still sitting in their accounts.
And in rare cases, the employee never had a plan to begin with, but was reported on the company’s census for testing purposes. And in the case I went through, the employee somehow thought in his mind he was in the plan, even though he never filled out the paperwork to do so, and on a $10/hour manual labor job probably found it better at the time to pocket the after tax $8/hour to cover expenses. So what happens when these people reappear years, decades or 100 years later? There’s suddenly a fire drill–drop all of your current cases/deadlines because some yahoo thinks they might have $1000 in an account, even though all the evidence says otherwise.
Less learned: don’t remain a fiduciary of a closed plan years afterward-especially when you were never an on-site accountant/majority owner of the firm/are out of state. Because you will be tracked down/blamed/stalked/threatened for something imaginary/that never happened until you can get the investment bank to dig out/sift through their backup/archive files to prove a negative!