“Now you see it, now you don’t” may be fine for a magic show but not when it comes to missing participants in your Retirement Plan. As Fiduciaries, Plan Sponsors have the responsibility to maintain accurate records and open lines of communication with all participants. If you have lost touch with former employees not only will you not be able to carry out your Fiduciary responsibilities, you will bear the unnecessary expense of returned mailings. It is the responsibility of the Plan Sponsor to keep track of former employees so that they can send required communications including quarterly participant statements. It is not an acceptable practice to ignore returned mail and default participants to “Estatements”-a common workaround offered by many recordkeepers.
The days of working for the same Employer for 30 years are pretty much over. As a result, uncashed checks are becoming a real issue for Plan Sponsors. Do you know how they are being accounted for and tracked in your Plan? Will you be prepared to pay participants if they come forward? As the number of abandoned account balances increases so will scrutiny of your procedures by Regulators and Auditors.
Plan Sponsors should review any policies and procedures with respect to locating and tracking missing participants and uncashed checks. These policies and procedures should be communicated to their plan providers and be periodically reviewed to confirm they are being administered appropriately. Assistance in locating missing participants can be found by using commercial locator services, credit reporting agencies, the Social Security Administration Letter Forwarding Service and Internet Search Tools. Keep detailed records of your search efforts to demonstrate your efforts in carrying out your Fiduciary responsibilities in this area.
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