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What should HR do with former employees 401k? (CA)

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1. What should HR do with 401K when an employee leaves the job?

2. How should HR inform the former employees who left the company years ago about their 401k is still under our company?

Each 401k has a designated administrator who should handle these issues. Retirement benefits including 401ks are heavily regulated under federal law. The federal EBSA or Employee Benefits Security Administration enforces these regulations. We could not begin to cover all the regulations regarding this situation.

At a minimum, the terminated employee should receive a written notice in a timely manner describing the options available under the 401k plan for transferring the funds or taking a lump-sum payout. These documents should also contain a warning about the tax liability of a lump sum payout.

If previous employees still have active 401k accounts, the employer must make a good-faith effort to locate the employees and contact them by mail. It is not recommended that the employer use these funds in any way.

Read more about this topic at: http://www.dol.gov/ebsa/compliance_assistance.html