20250SB__140597AMD INTRODUCED 2026-02-20 AMENDED_SENATE 2026-03-24 AMENDED_SENATE 2026-04-13 SB AMD Introduced by Senator Smallwood-Cuevas LEAD_AUTHOR SENATE Smallwood-Cuevas

An act to amend

Section of the Code of Civil Procedure, relating to unclaimed property. unclaimed property 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 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, 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. MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION 1.

Section of the Code of Civil Procedure is amended to read: 1521. (

a) Except as provided in subdivision (b), and subject to

Section 1510, all employee benefit plan distributions and any income or other increment thereon escheats to the state if the owner has not, within three 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. (

b) Except as provided in subdivision (c), an employee benefit plan distribution and any income or other increment thereon shall not escheat to this state if, at the time the distribution shall become 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 thereof who cannot be found after a period of time specified in the plan, the distribution has been subjected to a forfeiture that has not been reversed by the plan, and the trust or fund established under the plan has not terminated prior to the date on which the distribution would become forfeitable in accordance with the provision. (

c) A participant entitled to an employee benefit plan distribution in the form of residuals shall be relieved from a forfeiture declared under subdivision (

b) upon the making of a claim therefor. (

d) For purposes of this section, the following terms have the following meanings: (1) “Fiduciary” means any person exercising any power, authority, or responsibility of management or disposition with respect to any money or other property of a retirement system or plan. (2) “Administrator” means the person specifically so designated by the plan, trust agreement, contract, or other instrument under which the retirement system or plan is operated, or if none is designated, the employer. (e)

(1) To the extent that a court determines this

section to be inoperative, preempted, or otherwise limited, in whole or in part, by the federal Employee Retirement Income Security Act of 1974 (P.L. 93-406), or any other federal law, this

section shall be operative in the manner and to the extent allowed pursuant to any federal statute, regulations, or guidance governing this matter that are adopted by the United States Department of Labor.

(2) 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 this

section complies with federal law.