On Thursday, August 14, 2014 the Department of Labor issued its updated Field Assistance Bulletin 2014-01 to help fiduciaries with their responsibility in terminating defined contribution plans. This guidance can also be instructive for fiduciaries who are trying to locate missing participants in the plan. The purpose of the updated guidance is to replace 2 outdated and formerly mandatory locator options with modern internet search tool options. The former contact methods include; the Social Security Administration and IRS letter forwarding programs. Essentially, the DOL is saying if you can’t locate participants and you’ve tried all other options, “google it”. Read prior guidance in the 10-year-old Field Assistance Bulletin 2004-02.
The required steps in tracking down missing participants are now as follows:
- Use Certified Mail. Certified mail is an easy way to find out, at little cost, whether the participant can be located in order to distribute benefits. The Department provided a model notice that could be used for such mailings as part of a regulatory safe harbor, but its use is not required and other notices could satisfy the safe harbor.
- Check Related Plan and Employer Records. While the records of the terminated plan may not contain current address information, it is possible that the employer or another of the employer’s plans, such as a group health plan, may have more up-to-date information. For this reason, plan fiduciaries of the terminated plan must ask both the employer and administrator(s) of related plans to search their records for a more current address for the missing participant. If there are privacy concerns, the plan fiduciary engaged in the search can request that the employer or other plan fiduciary contact or forward a letter for the terminated plan to the missing participant or beneficiary. The letter would request that the missing participant or beneficiary contact the searching plan fiduciary.
- Check With Designated Plan Beneficiary. In searching the terminated plan’s records or the records of related plans, plan fiduciaries must try to identify and contact any individual that the missing participant has designated as a beneficiary (e.g., spouse, children, etc.) to find updated contact information for the missing participant. Again, if there are privacy concerns, the plan fiduciary can request that the designated beneficiary contact or forward a letter for the terminated plan to the missing participant or beneficiary.
- Use Free Electronic Search Tools. Plan fiduciaries must make reasonable use of Internet search tools that do not charge a fee to search for a missing participant or beneficiary. Such online services include Internet search engines, public record databases (such as those for licenses, mortgages and real estate taxes), obituaries and social media.
If the plan sponsor has exhausted all of the steps above and still cannot locate the missing participant or beneficiary, the plan sponsor must then consider distribution options or if a more extensive paid search is necessary. A more thorough search may require a fee and it is the fiduciary’s responsibility to determine if that fee is reasonable and appropriate.
Distribution options could include; individual retirement plan rollovers, opening an interest-bearing federally
insured bank account in the name of the missing participant or beneficiary, or transferring the
account balance to a state unclaimed property fund.
For more guidance or to read the full article, please visit the Field Assistance Bulletin 2014-01.