Missing Participants and Beneficiaries
- Posted by admin
- On January 28, 2025
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Retirement plan sponsors and administrators face a critical responsibility: ensuring that participants and beneficiaries receive the benefits they are entitled to. However, a persistent challenge arises when individuals cannot be located due to outdated contact information or life changes. Addressing this issue is essential for regulatory compliance and safeguarding participant rights.
This publication explores strategies and best practices for locating missing participants, highlighting available resources and guidance from key agencies such as the Internal Revenue Service (IRS), the Department of Labor (DOL), and the Pension Benefit Guaranty Corporation (PBGC).
Discontinuation of IRS Letter-Forwarding Service
Historically, the IRS assisted plan sponsors by forwarding letters to missing participants. However, this service was discontinued on August 31, 2012, under Revenue Procedure 2012-35. As a result, the IRS no longer processes requests to locate retirement plan participants or beneficiaries via the letter forwarding program.
Without this option, plan sponsors must adopt alternative measures to address this challenge effectively.
Alternative Methods for Locating Missing Participants
Plan fiduciaries are encouraged to utilize a variety of tools and services to reconnect with missing individuals, including:
- Commercial locator services
- Credit reporting agencies
- Internet search tools
The DOL also provides detailed guidance through Field Assistance Bulletin No. 2014-01, which outlines essential steps for fiduciaries of terminated defined contribution plans:
- Certified Mail: Send notices via certified mail to confirm receipt.
- Records Review: Check employer and related plan records for updated contact details.
- Beneficiary Outreach: Contact individuals designated as beneficiaries.
- Electronic Searches: Leverage free online search tools to locate missing participants.
For terminating plans, the DOL offers, through the above bulletin, additional search methods and distribution options when participants remain unreachable.
PBGC’s Missing Participants Program
For single-employer defined benefit plans undergoing standard termination, the PBGC provides a Missing Participants Program. This program connects unresponsive individuals to their retirement benefits, offering an effective solution for terminated plans.
Best Practices for Plan Fiduciaries
Maintaining accurate participant records is the cornerstone of mitigating the risk of missing participants. Plan fiduciaries should implement the following best practices:
- Regularly update participant contact information.
- Act promptly to address returned mail or uncashed checks.
- Establish clear communication strategies to keep participants informed.
The DOL’s detailed Best Practices for Pension Plans serves as an invaluable resource for administrators.
Conclusion
While the discontinuation of the IRS’s letter-forwarding service presents challenges, plan sponsors and administrators have a range of tools and strategies at their disposal. By leveraging alternative search methods, following DOL guidelines, and maintaining robust record-keeping practices, fiduciaries can fulfill their obligations and ensure participants receive their rightful benefits.
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