Missing Participants—What Am I Missing?

Missing participants are a problem—for employers, for plans, for beneficiaries and even for the participants themselves. A Nov. 11 session of ASPPA All Access offered a look at the challenge missing participants pose, and what can—and must—be done to meet it.

Maggie Younis, CPC, QPA, QKA, TGPC, ERPA, National Director, Consultant Relations at Lincoln Financial Group, and S. Derrin Watson, APM, an attorney who is of counsel with the Ferenczy Benefits Law Center, offered their insights in the session. 

Who They Are and How They Go Missing

Participants are considered to be missing for one of two reasons: they cannot be located, or they do not respond to efforts to contact them. And that, in turn, can be attributable to a variety of reasons: 

• the employer is part of a merger or acquisition;
• records are lost;
• the participant died;
• beneficiary records were not updated; or
• if the participant moves, doesn’t update contact information or doesn’t want to be located.

Why Missing Participants Are a Problem

Missing participants are a problem because they: 

• may prevent timely required minimum distributions, which could result in penalties;
• create added plan expense; 
• increase exposure to fraud; 
• could delay plan termination; and  
• complicate reporting on the Form 5500.

Missing participants also generate attention from the Department of Labor (DOL), Younis and Watson noted, and that the DOL sees missing participants as a fiduciary issue. “The Department of Labor has been concerned for quite some time about the importance of uniting participants with their money,” said Watson. So concerned, he said, that the DOL has said that some steps to find them are so important that fiduciaries “should always take them, regardless of the size of the participant account balance.” 

Finding Missing Participants 

Failure to take certain steps would violate the fiduciary duties of prudence and loyalty that are contained in Section 404(a) of ERISA, Watson said. 

The DOL in Field Assistance Bulletin 2014-01 outlined steps that can be taken to find missing participants: 

• send a notice to a participant using certified mail;
• check employer records;
• contact designated beneficiaries;
• use electronic search tools; and 
• check public record databases and obituaries. 

Watson hailed the success of a DOL pilot program for finding missing participants. “They were able to reunite an astonishing amount of money to the participants just be sending a certified letter,” he said.