Missing Participants: End of the Year Clean Up

Missing Participants: End of the Year Clean Up

October 27, 2020
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Missing participants are former employees who still have an active retirement plan account balance, and as a plan fiduciary, you’re responsible for them. The DOL and IRS are paying more attention to plan sponsors’ efforts to identify and locate these participants, especially when uncashed checks and approaching RMDs are involved.

The first step in complying with the DOL’s guidance about missing participants is putting your plan in order so you can identify them. By cleaning up your plan, you’ll be able to tackle the problem and take the necessary steps to locate these participants. This easy-to-use checklist will help you get started.

  • Written policy. Prepare a written policy or review your current one, detailing the steps to be taken to identify and find your missing plan participants.
  • Annual plan review. Conduct a full plan review in conjunction with your other end-of-year plan clean-up activities. Identify terminated participants with balances. Have your service provider run a report on terminated participants, preferably at least quarterly. Pay particular attention to participants with small balances of $5,000 or less and work with your provider to start the force out process.
  • Audit your financial institution’s uncashed checks report. Uncashed checks represent a fiduciary liability over and above that of simply having missing participants. It’s good practice to review these reports when they’re run, preferably at least quarterly.
  • Review DOL steps to locate missing participants. Although FAB 2014-01 is aimed at terminated plans, many sponsors of ongoing plans are using the guidance to try to locate their missing participants.
  • Conduct vigorous address searches. Send the DOL-provided notice using the DOL checklist until the participant is either located or unable to be. Include searches before required planned distributions such as RMDs or cash-outs.
  • Document your search results. Keep meticulous records of each step taken and the results in case of a DOL audit.

This easy-to-use checklist can help you take control of former employees and your missing participant problem: Download Checklist