To be compliant, how hard do I need to work to find someone who is missing before I can stop?
As hard as the DOL says, you must.
In early 2021, over one billion dollars worth of orphaned retirement accounts were reported in the United States. An “orphaned account” is an account that has assets in it, but the whereabouts of the participant who owns these assets are unknown. This incredible number prompted the Department of Labor (DOL) to release best practices to plan sponsors related to managing their retirement plan and locating lost participants. The guidelines require the plan sponsor to go through recommended steps to find these missing participants. While these practices are suggestions, not requirements, they provide a set of reasonable guidelines that plans should consider implementing.
The DOL’s best practices can be broken down into the following step-by-step process that plans can utilize to reach compliance:
- Send all required communication to all the contact points (email, phone number, physical address) the participant initially provided.
- If communication at these given points is not confirmed, review other provided contacts the participant may have offered at onboarding in their human resource file (i.e., emergency contacts).
- Reach out to these emergency contacts and request updated contact information.
- Ask coworkers if they may have the participant’s contact information.
- Contact the participant’s beneficiaries to request any new contact information.
- Using the internet or other free platforms, do a national public search to locate any contact information for the participant.
- Utilize paid location services, such as private investigator or credit bureau databases.
Conducting searches via these recommended steps should enable the plan to locate the participant. After completing these steps, the plan has shown reasonable effort and should meet compliance standards in case of a DOL, IRS, or legal investigation.
We recommend that you document all steps in this process and provide proof of your attempts to locate the participant. Additionally, you should require that these steps are utilized for all participants who are considered missing rather than simply choosing which participants to pursue. No matter how long a person has been missing or their account size, every lost participant should receive the same location efforts.
If this process seems burdensome, or if your team doesn’t have the capacity to pursue each missing participant, contact us. Plan Notice engages with retirement plans to provide location services. Additionally, we provide plans with an outsourced solution to distribute and verify all required notices and plan communication. Additionally, plan Notice provides plans with documented proof of noticing to guarantee compliance. Finally, when we partner with a retirement plan, we accept all responsibilities, including fines or costs associated with audits or litigation pertaining to improper noticing or missing participants.
