“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.

Due to the nondiscrimination regulations for tax qualified plans, the IRS places a limit on the amount that a Highly Compensated Employee (HCE) may save in a 401(k) plan. This limit is based on the average rate of savings for employees who are not HCEs. The IRS defines an HCE as an employee who is a 5% owner in the current or previous plan year, or an employee who earned over $115,000 in the previous plan year. Through attribution, certain family members of 5% owners may also be considered HCEs for testing purposes.

The 2012 calendar year brought sweeping changes to the retirement plan industry. 401(k) practitioners and recordkeepers devoted most of the year to developing, implementing and distributing fee disclosures pursuant to Department of Labor Regulations 408(b)(2) and 404(a)(5). Lots of paper was generated, but just how effective were these new disclosures at familiarizing plan participants with who, what and how much they are paying to maintain their retirement accounts?