Conditions.
Conditions. A fiduciary shall qualify for the safe harbor described in paragraph (c) of this section if:
(1) The distribution described in paragraph (b) of this section is made to any of the following transferee entities—
(i) To an individual retirement plan within the meaning of section 7701(a)(37) of the Code;
(ii) In the case of a distribution on behalf of a designated beneficiary (as defined by section 401(a)(9)(E) of the Code) who is not the surviving spouse of the deceased participant, to an inherited individual retirement plan (within the meaning of section 402(c)(11) of the Code) established to receive the distribution on behalf of the nonspouse beneficiary;
(iii) In the case of a distribution by a qualified termination administrator (other than a bankruptcy trustee described in § 2578.1(j)(3) of this chapter or an eligible designee described in § 2578.1(j)(4)(ii) of this chapter) with respect to which the amount to be distributed is $1,000 or less and that amount is less than the minimum amount required to be invested in an individual retirement plan product offered by the qualified termination administrator to the public at the time of the distribution, to:
(A) An interest-bearing federally insured bank or savings association account in the name of the participant or beneficiary,
(B) The unclaimed property fund of the State in which the participant's or beneficiary's last known address is located, or
(C) An individual retirement plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) offered by a financial institution other than the qualified termination administrator to the public at the time of the distribution; or
(iv) In the case of a distribution by a bankruptcy trustee as described in § 2578.1(j)(3) of this chapter or an eligible designee as described in § 2578.1(j)(4)(ii) of this chapter with respect to which the amount to be distributed is $1,000 or less and such bankruptcy trustee or eligible designee, after reasonable and good faith efforts, is unable to locate an individual retirement plan provider who will accept the distribution, to either distribution option described in paragraph (d)(1)(iii)(A) or (B) of this section.
(v) Notwithstanding paragraphs (d)(1)(iii) and (iv) of this section—
(A) The qualified termination administrator may disregard the $1,000 threshold therein if the qualified termination administrator reasonably and in good faith finds that—
(1) The participant is deceased;
(2) The designated beneficiary or beneficiaries are deceased or unable to be identified based on records located and updated pursuant to § 2578.1(d)(2)(i) of this chapter;
(3) The estate of the participant is not the designated beneficiary; and
(4) The qualified termination administrator has no actual knowledge of any claims by any person to all or part of the deceased participant's account.
(B) If the estate of the participant is the designated beneficiary, the qualified termination administrator may disregard the $1,000 threshold therein if the qualified termination administrator reasonably and in good faith finds that—
(1) An estate does not exist or cannot be found;
(2) The qualified termination administrator has no actual knowledge of any claims by any person to all or part of the deceased participant's account; and
(3) The qualified termination administrator is unable to establish an individual retirement plan for the benefit of the estate of the participant.
(C) A summary of the pertinent findings made in paragraph (d)(1)(v)(A) or (B) of this section must be included in the notice described in § 2578.1(d)(2)(ix)(G) (the Final Notice) of this chapter, including the basis for the findings (including the name and last known address of the beneficiary, if known) and an attestation that the qualified termination administrator has the full name and last known address of the deceased participant.
(2) Except with respect to distributions to State unclaimed property funds (described in paragraph (d)(1)(iii)(B) of this section), the fiduciary enters into a written agreement with the transferee entity which provides:
(i) The distributed funds shall be invested in an investment product designed to preserve principal and provide a reasonable rate of return, whether or not such return is guaranteed, consistent with liquidity (except that distributions under paragraph (d)(1)(iii)(A) of this section to a bank or savings account are not required to be invested in such a product);
(ii) For purposes of paragraph (d)(2)(i) of this section, the investment product shall—
(A) Seek to maintain, over the term of the investment, the dollar value that is equal to the amount invested in the product by the individual retirement plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section), and
(B) Be offered by a State or federally regulated financial institution, which shall be: a bank or savings association, the deposits of which are insured by the Federal Deposit Insurance Corporation; a credit union, the member accounts of which are insured within the meaning of section 101(7) of the Federal Credit Union Act; an insurance company, the products of which are protected by State guaranty associations; or an investment company registered under the Investment Company Act of 1940;
(iii) All fees and expenses attendant to the transferee plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or account (described in paragraph (d)(1)(iii)(A) of this section), including investments of such plan, (e.g., establishment charges, maintenance fees, investment expenses, termination costs and surrender charges), shall not exceed the fees and expenses charged by the provider of the plan or account for comparable plans or accounts established for reasons other than the receipt of a distribution under this section; and
(iv) The participant or beneficiary on whose behalf the fiduciary makes a distribution shall have the right to enforce the terms of the contractual agreement establishing the plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or account (described in paragraph (d)(1)(iii)(A) of this section), with regard to their transferred account balance, against the plan or account provider.
(3) Both the fiduciary's selection of a transferee plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or account (described in paragraph (d)(1)(iii)(A) of this section) and the investment of funds would not result in a prohibited transaction under section 406 of the Act, or if so prohibited such actions are exempted from the prohibited transaction provisions by a prohibited transaction exemption issued pursuant to section 408(a) of the Act.