At one time or another all plan sponsors will likely be in the position of having to locate missing participants. This may be related to delivery of regulatory required communications, distributing of assets, or communicating fund changes to active and/or terminated participants. If the delivery of necessary communications is encumbered because a participant cannot be located there exists a fiduciary requirement to perform a “reasonable search” for this “missing” participant. There are various search methods that would be considered as reasonable good faith efforts, including:
- Certified Mail (with a return receipt) to the last known address;
- Checking records of other benefit plans (i.e., employer provided health plan);
- Using the IRS or SSA letter forwarding program;
- Engaging a commercial locator service; and
- Using internet search tools.
In the event that your plan allows cash-out distributions on terminated participants with account balances under $1,000, or rollover to IRA for balances between $1,000 and $5,000, be sure to check the provisions described in the plan document. Typically a rollover to an IRA on behalf of these participants can be accomplished for participants deemed to be missing.