What to Do When EPF Account Becomes Inactive: Understanding the Rules and Next Steps

This article explains the rules and steps to follow when your EPF account becomes inactive. Explore its impact on interest, withdrawal options and reclaiming your funds.

Introduction 

Imagine this scenario: You’ve been part of the workforce, contributing diligently to your Employees’ Provident Fund (EPF) account for years. Know What to Do When EPF Account Becomes Inactive? Then, for various reasons, you stop contributing, and your EPF account becomes dormant. What does this mean for your hard-earned money, and what steps should you take? 

In this comprehensive guide, we’ll delve into the rules, implications, and actions you should consider when your EPF account becomes inactive. 

Understanding Dormant EPF Accounts

First, let’s clarify what it means for an EPF account to become dormant:

An EPF account becomes dormant when it stops earning interest due to certain conditions. Here are the key scenarios when an EPF account can turn dormant:

1. Retirement After 55 Years:

If you retire from service after the age of 55, your EPF account may become dormant. This is because you’re no longer making fresh contributions.

2. Permanent Migration Abroad:

If you migrate abroad permanently, your EPF account may become dormant. In this case, you won’t have the opportunity to make contributions.

3. Decease of the Subscriber:

In the unfortunate event of the subscriber’s passing away, the EPF account becomes dormant.

4. No Claim Received for 36 Months:

If no claim is received for settlement of the EPF account within 36 months from the date when the amount became payable upon cessation of employment, the account turns dormant.

In simpler terms, if you do not apply for EPF withdrawal within 36 months of quitting your job, the account becomes dormant.

During the active phase of your EPF account, it continues to earn interest, providing a secure way to grow your retirement savings. However, once it becomes dormant, it stops accruing interest.

How to Handle a Dormant EPF Account?

Now that you understand when an EPF account becomes dormant, let’s explore the steps to take:

1. Know Your Options:

While there is no mandatory requirement to close your EPF account, it’s essential to be aware of the implications. Dormant EPF accounts cease to earn further interest, which can impact your retirement savings.

2. Reclaim Your Funds:

• After seven years of dormancy, the funds in dormant EPF accounts are transferred to the Senior Citizen Welfare Fund by the Employees’ Provident Fund Organization (EPFO).
• EPF members or their nominees can claim this amount from the Senior Citizen Welfare Fund within 25 years by providing the necessary proofs and documents.

3. Initiating the Claim:

• EPFO provides an online channel for claiming funds from dormant accounts.
• The subscriber needs to log in to the EPFO website and access the Inoperative Helpdesk.
• Fill in all the details of the dormant EPF account and submit KYC details, including Aadhaar number, PAN number, bank account number, and IFSC code.
• The application will be verified by EPFO staff and processed accordingly.

4. Nominee Claims:

• If the subscriber has nominees, they can claim the funds in the percentage specified by the subscriber.
• There is a time limit of 25 years for nominees or EPFO members to claim the amount from the Senior Citizen Welfare Fund. After that, the unclaimed amount goes to the government.

Challenges and Legal Heirs

In situations where the subscriber has not named any nominees or mentioned the PF account in their will, claiming the amount from the dormant EPF account can be challenging. In such cases, legal heirs must provide a succession certificate or a legal heir certificate naming them as successors.

This typically involves approaching a court and may require providing bonds with sureties or securities to cover any potential losses due to certificate misuse.

Vakilsearch’s ITR Services: Your Partner in Financial Matters

As you navigate the intricacies of dormant EPF accounts and take steps to reclaim your funds, it’s essential to ensure your financial matters are in order. Vakilsearch offers ITR services designed to simplify the income tax return filing process. Our experts ensure accurate and hassle-free tax returns, helping you stay compliant with tax laws and regulations.

With Vakilsearch’s ITR Services, You Can:

• Maximize tax deductions and exemption
• Avoid penalties and errors in your tax returns
• Stay informed about changing tax laws
• Experience a smooth and stress-free tax filing process

The Bottom Line 

When your EPF account becomes dormant, it’s vital to understand the implications and take appropriate action to reclaim your funds. By following the steps outlined in this guide and exploring Vakilsearch ITR services, you can ensure financial stability and a secure future.

FAQs (Frequently Asked Questions)

Can I keep my EPF account open indefinitely without making contributions?

Yes, there is no mandatory requirement to close your EPF account, even if you are not making fresh contributions. However, be aware that the account will stop earning interest.

How can I check if my EPF account has become dormant?

You can verify the status of your EPF account by logging into the EPFO portal or contacting your EPF regional office.

What happens if I don't claim the funds from the Senior Citizen Welfare Fund within 25 years?

After 25 years, unclaimed funds from dormant EPF accounts are transferred to the government.

Read more:-

• EPF Form For Online Claim
• Resigned Employees PF Calculation
• Withdrawal Process of PF Amount