Welcome to our second video in our four-part series on Plan Design. Effective plan design helps ensure your retirement plan meets your organization’s and your participants’ needs.
Today, we’re focusing on the automatic force-out provision, a feature included in most plan documents. This provision allows you to remove terminated participants with small balances your plan. By transferring these balances into a rollover IRA, you not only reduce administrative costs but also help participants avoid penalties and taxes they might face if cashed-out balances are mishandled. Recent updates have increased the force-out limit from $5,000 to $7,000. Work with your plan’s recordkeeper to make sure your plan document is updated accordingly.
Have questions about how to update or use the automatic force-out provision? Our team can help you determine the best approach for your plan.
Curious about the full list of eight considerations for effective plan design? Click here to download the PDF.
