Contacting Missing Participants
A Discussion of Best Practices
Today we want to explore the topic of the responsibilities of plan sponsors in relation to missing participants in retirement plans.
The Department of Labor's 2021 best practices outline that it's the duty of the plan sponsor to communicate with all participants and trace missing ones. However, the specifics of finding these participants were not detailed, only that national location searches and public databases should be utilized.
Plan sponsors have access to various solutions to locate missing individuals. The plan committee should establish a well-documented process and consistently adhere to it in order to find any "lost" participant. This process should involve escalating efforts to locate elusive participants.
Here is an example of steps that could be undertaken: Step One - Identify "missing" participants and attempt to locate them using information from their employment paperwork. Step Two - Request updated contact details from colleagues. Step Three - Reach out to emergency contacts or beneficiaries listed by the participant. Step Four - Use search engines to find potential matches to the participant's name, then verify these matches.
Step Five - Conduct an online obituary search. Step Six - Engage a skip tracing firm to run the participant's Social Security number through the Credit Bureau. Step Seven - Hire a private investigator.
This is an example of a strategy you can implement and document to demonstrate diligence in locating lost participants. Outsourcing solutions can handle some or all of this work, but they come with associated costs.
If we are unable to verify receipt or if the participant is deceased, we conduct a similar process for the beneficiaries at an additional cost of two hundred dollars, also charged directly from the participant's account.
As a plan sponsor, it's your duty to locate missing participants and have a documented procedure that the Department of Labor, IRS, or litigating attorney could follow in case of an investigation.
For more information around contacting missing participants, contact us today.
