A distribution from a participant's account was made from our 401(k) plan as a result of a termination of employment. The participant says that she didn't request the distribution. Our review of the distribution request reveals that she didn't sign the form. The check was made payable to her and sent to the PO box listed on the distribution form. Help! What are our obligations to the participant?

If the participant has not cashed the check tell her to return it and deposit the funds into her account with interest and delete any indication of a distribution since the payment was made as a mistake of fact.

The distribution occurred last year (the TPA is currently tracking down a copy of the cashed check), but the participant learned about the authorized distribution this year.

Does your plan allow for force out distributions? That may be why her account was paid out...she did not respond to the distribution notices...This may be the case, depending on how your plan was amended for the new automatic cash out rules.

The plan doesn't force participants out of the plan. A distribution election form was completed.

If the participant did not make the request, and will produce an affidavit to that effect; it is possible that the payment was made to someone else fraudulently.

If so, it would still be the plan's obligation to return the funds to the participants account.

In the past if this happened, as Trustee, the bank I worked for would:
1 trace down the payment
2. trace down the election form
3. ascertain that the distribution was not made to the participant
4. Contact the clearing bank for information related to who "cashed" the check
5. If able to identify individual, demand refund
6. in extreme situation file a theft complaint with local DA office.

If you wish to discuss offline drop me a note with your telephone number