If a participant's account holds assets that are worthless, are the assets formally distributed when the participant is eligible for distribution or is some other disposition or treatment preferable? If assets are distributed, is Form 1099-R issued showing a zero value?

One practical bit to watch out for. Some computer software for recordkeeping or Form 1099-R is (or was, when I faced this problem) designed to treat a distribution amount of $0.00 as an error (and not of the kind to which a user could respond "Yes we really mean this").