I recently joined a company and have found that they 401k plan holds some stock shares, which they have never reported as a plan asset on the 5500. The plan
is very large, so the amount of these shares represent less than 2% of the overall assets of the plan. The shares are in the name of the plan and dividend
payments have gone uncashed - the employer has not benefitted from this stock or the dividend payments.
I'd like to take steps to dispose of the shares now and have the proceeds allocated across current plan participants, along with any outstanding dividend payments. It really doesn't make sense for the plan to hold shares in an individual stock, and from the records I can find, it only came to hold those shares due to the de-mutualization of a life insurance company that at one time the plan held policies with(the policies have were surrendered some time ago). What I'm not sure is what potential penalty we may be faced with for not reporting these assets on the 5500, and have been unable to find info that cites this specific issue. The issuance of the shares dates back about 8 years, so multiple returns have omitted the assets.
Any thoughts on best approach to use here?
I'd like to take steps to dispose of the shares now and have the proceeds allocated across current plan participants, along with any outstanding dividend payments. It really doesn't make sense for the plan to hold shares in an individual stock, and from the records I can find, it only came to hold those shares due to the de-mutualization of a life insurance company that at one time the plan held policies with(the policies have were surrendered some time ago). What I'm not sure is what potential penalty we may be faced with for not reporting these assets on the 5500, and have been unable to find info that cites this specific issue. The issuance of the shares dates back about 8 years, so multiple returns have omitted the assets.
Any thoughts on best approach to use here?
