Who is going over the top? Delaware's Finance and State departments arm wrestle over Unclaimed Property

An Interesting article in the WSJ by Vipal Monga describes the battle in Delaware to keep its business friendly reputation and to remain fiscally solvent.  Over 50% of publicly traded corporations are based in Delaware and unclaimed property is one of the largest industries in the state.    As state budgets are getting tighter and tighter expectations, Vipal writes, are only getting higher for Unclaimed Property Audits. 

 State projections indicate that an even more aggressive stance could be in the works. According to forecasts in May, Delaware expects to collect $566.5 million in unclaimed property in fiscal 2013, up 19% from the previous year, after including the money spent on infrastructure. http://blogs.wsj.com/cfo/2013/06/18/delaware-shows-two-faces/

Nationally there has been a focus on the life insurance industry, but rumors are growing that retirement plans might be next.

The Berwyn Group's AddressCheck solution was recently mentioned in OneAmerica's monthly newsletter in an article on Finding Lost Participants.  As OneAmerica notes there are several simple steps to take to reduce your Pension Benefit Guaranty Corporation (PBGC) premiums by cashing out small balances.

Timely distribution of small benefit or account balance cash-outs can help reduce the instance of lost participants. Small benefit cash-out rules are governed by the plan document. The Internal Revenue Service permits a plan document to include the following mandatory cash-out rules: 

• Value of retirement benefit or account balance is $1,000 or less. If the participant does not make an election regarding distribution of his or her benefit or account balance, the benefit or account balance can be distributed in cash without the participant's consent.
• Value of retirement benefit or account balance is $1,001-$5,000. If the participant does not make an election regarding distribution of his or her benefit or account balance, the plan can transfer the funds to an IRA established for the participant.

They further mention some of the difficulties and downside to utilizing the Social Security Administration's (SSA) Letter Forwarding service: Price, Time (up to six months), and lack of follow up options (none).

The NFL reminds us to trust, yet verify

As the Bears season rapidly came to a close, I was surprised to see 1950’s defensive alumnus John Helwig in the news, not because the defense was the only saving grace, but rather John passed 17 years ago.  The AP reported that his wife, Ruth, told officials that her husband was still alive twice.  After Ruth passed in 2007, his daughter continued to collect funds for an additional 6 years.  In total the NFL was left with a tab of  more than $200,000. 

I wanted to see if this situation was preventable.  Perhaps Mr. Helwig’s passing went under the radar of the state and federal government.  However, using Berwyn’s Quick Look-Up solution with his first name, last name, and date of birth, it was easy to see that John’s passing was noted by the State of Michigan’s Dept. of Health and Vital Statistics and the Social Security Administration (SSA). 

The other two points of interest are: the SSA record listed zip code and the date of death was 00.  Zip codes were regularly released by the SSA, however with the changes to the Death Master File on 11/1/2011 zip codes were stripped as a field.  Additionally, records were stripped of the date of death, for a brief period of time as a security measure before it was realized that there was no security benefit it doing so. To this day though there are frequently differences between the date of death provided by the state and federal governments.  With the zip code included and a date of death of 12/00/1994 indicates that the NFL could have easily prevented this over payment early on by checking records.

Government Mail Forwarding: IRS, SSA and the Post Office

As the leading provider of an address clean up solution, we have received many questions about the various mail forwarding services provided by the US Government.  As of August 31, 2012 according to IRS Revenue Procedure 2012-25, the IRS will no longer forward mail.  “Locating a missing taxpayer who may be entitled to a retirement plan payment or other financial benefit from an individual, company or organization is not considered to be a humane purpose for which the IRS will provide letter-forwarding services.”  The major reason is the number of alternatives both online and through third parties that rendered the IRS mail forwarding an unneeded expense for taxpayers.

The SSA still continues to operate a mail forwarding program.  There are several requirements in addition to the $35 per letter fee.  All letters need to be provided to the SSA in an open envelope to be read before mailing. There will be no confirmation of delivery.  No addresses will be given to the organization to update their records. Finally you must provide place of birth, mother’s full maiden name and the father's full name.  The SSA is up front in the fact that it does not want to perform this service on their website, ”Because this service is not related in any way to a Social Security program, its use must be limited so that it does not interfere with our regular program activities.”http://www.socialsecurity.gov/foia/html/ltrfwding.htm   

Finally the US post office will forward mail for six months on be half of individuals.  If that individual chooses for a fee they can be extend the mail forwarding for an additional 6 months.  In all likely hood most individuals, don't choose the extension. Anecdotally, a number of organizations have seen individuals updating the bank or their phone company and expecting that their address will be updated universally.  

If you would like more information on Berwyn’s Address Check solution click here or email me at mike@berwyngroup.com.