Unclaimed personal property: employee benefit plan distributions.

Plain English Breakdown

Checked against official source text during the last sync.

Unclaimed Employee Benefit Plan Distributions

This legislation adds a requirement for unclaimed money from employee benefit plans to have been subject to forfeiture and not reversed by the plan before it can be given to the state, with provisions following federal law if applicable.

What This Bill Does

• Adds a requirement that an unclaimed distribution must have been subject to forfeiture and not reversed by the plan for the exception to apply.
• Specifies that if federal laws or regulations limit this bill's provisions, they will follow those rules instead.
• Allows the Controller to make agreements with other states to ensure compliance with federal law regarding these distributions.

Who It Names or Affects

• People who have unclaimed money from employee benefit plans
• Employers and plan administrators managing these funds

Terms To Know

Escheatment

When property or money without an owner is given to the state.

Forfeiture

The loss of a right, privilege, or benefit due to failure to meet certain conditions.

Limits and Unknowns

• It's unclear how this bill will be enforced and what penalties there might be for non-compliance.
• This legislation relies on federal guidance which may change over time.

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

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