There was a participant who moved away.
Where has he gone? He didn’t say.
Our paths never cross.
And now he’s lost.
He’s due some money. But how can I pay?
Especially for plans that have a period of delay prior to distributing participant balances, it is only a matter of time before you may come across a former participant with a vested balance that you are unable to contact. When mail comes back as undeliverable, and the phone number on record no longer belongs to the former employee, what further action is required? Finding missing participants can be a challenge. Fortunately there are guidelines for a fiduciary to follow and your third party administrator is happy to assist with the process.
First, check the plan document. This advice rings true for just about every issue that may arise with a qualified retirement plan. Your plan document may include the steps to be taken to locate a lost participant and the steps to be taken if the participant cannot be found.
The Department of Labor issued a field assistance bulletin here on the subject of lost participants. While the bulletin was designed for terminating plans, it provides useful steps for any plan that is attempting to find a missing participant.
The bulletin requires a fiduciary to try each of the four steps below to locate a missing participant prior to distributing plan benefits:
- Send a certified letter to the last known address of the lost participant
- Check related plan records to see if there are more current addresses for either the participant or his beneficiary
- Contact designated beneficiaries to see if they can help locate the missing participant
- Use free electronic search tools, like public record databases, obituaries, and social media
Also, there are fee-based search services that can be used. If a participant still cannot be located, consider whether the plan document will permit forfeiture of a lost participant balance or whether plan provisions permit small balance distributions to be transferred to an automatic rollover IRA for the participant without first obtaining the participant’s consent.