Default IRAs

Default IRA Services That Protect You and Your Plan Participants

When plan participants fail to respond to benefit election requests, it can set in motion a complex and time-consuming asset management process for plan providers, sponsors and third party administrators. With PenChecks’ innovative Default IRA solutions you can:
  • Lower your retirement plan administration costs
  • Reduce your fiduciary exposure
  • Protect participants’ deferred tax status
  • Redirect your staff’s time and resources to other business processes

To qualify, Default IRAs must meet the following requirements:

  • The IRA must be used with ongoing qualified pension plans.

Combining our experience and expertise with cutting-edge benefits distribution technologies, we establish safe, compliant Default IRAs that meet the needs of your retirement plan distribution process and your plan participants.

Complete Default IRA Solutions with PenChecks Premier Level Service

The affordable solution for unresponsive participant retirement plan distributions, PenChecks’ Premier IRA Fiduciary Service establishes and administers a Default IRA for participants who don’t respond to benefit election requests. This complete default participant IRA service includes:

  • Advanced participant searches
  • First class mail notices to participants
  • Certified mail notices to participants
  • Notices to designated beneficiaries

When PenChecks receives an elective response from a participant, we process the distribution accordingly, including all tax withholding, remittance, reporting and 1099Rs. When participants do not provide an elective response, we establish and maintain a Default IRA, including all tax reporting and 1099-Rs.

Complying with all Department of Labor notification and search requirements for non-responsive plan participants, PenChecks:

  • Conducts an address search for the participant and updates the address if necessary.
  • Sends a letter via certified mail, notifying the participant of the pending distribution. The letter includes instructions on how to make a benefit election, and indicates that a Default IRA will be established if the participant does not respond within 45 days.
  • Mails a letter to the designated beneficiary, requesting their assistance in locating the participant.

If the participant responds within 45 days, we confirm their identity and invite them to visit our secure participant benefit election website to make their benefit election. If the participant does not respond within 45 days, we establish a Default IRA and register the participant with the National Registry of Unclaimed Retirement Benefits. We also file all mandatory federal and state tax returns for all distributions.

PenChecks Standard Level Default IRA Solutions

The oldest and largest Default IRA services program in the U.S., PenChecks standard level service saves you time and reduces your fiduciary exposure with the following features:

  • Simple online processing
  • 24/7 access to P3, PenChecks Pay Portal
  • Create distribution requests, monitor status, review history and generate reports
  • No minimum account balance
  • No maximum account balance for terminating plans
  • No cost to plan sponsor or TPAs; fees may be charged directly to the participant’s account balance
  • Processing for all plan types (terminated DB pension plans under the jurisdiction of the PBGC must submit missing participants to the PBGC)
  • Dept. of Labor safe harbor compliant
  • Automatic registration with the National Registry of Unclaimed Retirement Benefits (NRURB)
  • Facilitate all IRA administration and participant interaction (1099R, 5498, RMD, QDRO)
  • Annual address search and updates

Get Cash Back with PenChecks’ IRA Services Reward Program

Successfully managing retirement account distributions can be a painstaking process, and PenChecks believes that plan advisors and administrators should get rewarded for their hard work.

When you sign up for PenChecks’ IRA Services Reward Program, you’ll get a $10 annual reward for each Default IRA account established through your account. Rewards are paid out when your account balance exceeds $45 by December, and proper disclosure to the plan is required.

Depending on the number of participants in your plan, the rewards can quickly add up! For example, suppose you create 500 default or missing participant IRAs through your account, and they all exceed $45 in December. At the end of the year you’ll receive a $5,000 reward check from PenChecks!

Follow these steps to begin earning your IRA services rewards today:

  • Open your account. There is no fee to register, and it only takes about 10 minutes to complete.
  • Fill out the IRA Services Reward program agreement and fax or email back to PenChecks at (619) 462-1766 or
  • Disclose the relationship with the plan. We provide a sample disclosure form in the agreement.
  • Establish your Default IRAs under your account or by taking advantage of our Premier Fiduciary Service.
  • Sit back and collect your IRA Services Reward check in the mail every December.

To learn more about our IRA Services Reward Program, Default IRA accounts, or other PenChecks IRA solutions call (800) 541-3938 today!

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