Unclaimed personal property: employee benefit plan distributions.

Plain English Breakdown

The official source does not provide specific details on the number of states expected to collaborate.

Unclaimed Employee Benefit Plan Distributions

This legislation adds a requirement for unclaimed money from employee benefit plans to have been subject to forfeiture before it can be considered for escheatment and allows state laws about unclaimed distributions to follow federal guidelines if there are conflicts.

What This Bill Does

• Adds a requirement that an unclaimed distribution must have been subject to forfeiture before it can be considered for escheatment (going to the state).
• Allows state laws about unclaimed distributions to work with federal rules if there are conflicts, as decided by courts or guidance from the U.S. Department of Labor.
• Gives the Controller permission to make agreements with other states to ensure compliance with federal law for unclaimed property.

Who It Names or Affects

• People who have unclaimed money in employee benefit plans.
• State officials responsible for handling unclaimed property.
• Employee benefit plan administrators and trustees.

Terms To Know

Escheatment

When unclaimed property goes to the state after a certain period of time.

Forfeiture

When an employee benefit plan cancels or takes back money that was supposed to be paid out.

Limits and Unknowns

• The bill does not specify what happens if the federal law changes after this bill is passed.
• It's unclear how many states will join in collaborative agreements with California for handling unclaimed property.

Official Summary Text

SB 1405, as amended, Smallwood-Cuevas.
Unclaimed personal property: employee benefit plan distributions.
Under existing law, employee benefit plan distributions and any income or other increment thereon escheats to the state if the owner has not, within 3 years after it becomes payable or distributable, accepted the distribution, corresponded in writing concerning the distribution, or otherwise indicated an interest as evidenced by a memorandum or other record on file with the fiduciary of the trust or custodial fund or administrator of the plan under which the trust or fund is established. Existing law provides for an exception
to escheatment
if, at the time the distribution becomes payable to a participant in an employee benefit plan, the plan contains a provision for forfeiture or expressly authorizes the administrator to declare a forfeiture of a distribution to a beneficiary
who cannot be found after a period of time specified in the plan, as specified.
This bill would establish, as an additional condition for the above exception to apply, the requirement that the distribution have been subject to a forfeiture that has not been reversed by the plan.
This bill would
also
provide that to the extent a court determines the above provisions to be inoperative, preempted, or otherwise limited, in whole or in part, by the federal Employee Retirement Income Security Act of 1974, or any other federal law, the above provisions will be operative in the manner and to the extent allowed pursuant to any federal
statute or regulations
statute, regulations, or guidance
governing this matter that are adopted by the United States Department of Labor. The bill would also provide that if the Controller finds it necessary, the Controller may enter into a multistate collaborative agreement or other contract for the purpose of ensuring that any property delivered to this state that may be subject to the above provisions regarding employee benefit plan distributions complies with federal law.

Current Bill Text

Download Bill PDF