February 8, 2021

Importance of Finding Missing Plan Participants

Many Atlanta businesses offer retirement plans as a benefit to employees to encourage savings and as a vehicle for the tax-free investment of contributions. These plans are one of the most effective means of encouraging participation and helping employees build a solid financial foundation for retirement. In fact, they are so effective that the Setting Every Community Up for Retirement (SECURE) Act implemented several changes to incentivize businesses to offer retirement plans. While offering a plan is essential to saving, plan sponsors should also maintain communications with participants to meet compliance requirements and to disburse important information on benefits. This allows the plan sponsor to provide needed information and updates when important changes are made. However, missing participants create a challenge to the process. The good news is the Department of Labor recently issued, Missing Participants Best Practices, to help guide plan sponsors. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key information below.

Missing Participant Red Flags

In many cases, plan sponsors are unaware that participants are missing until a triggering event occurs which brings it into focus. For this reason, it is important to regularly review plan operations to check for red flags that a broader problem exists. This may include the following situations:

• There are more than just a small number of missing or non-responsive participants.
• More than a small number of terminated vested participants, who have reached normal retirement age but have not started receiving pension benefits.
• Missing, inaccurate, or incomplete contact information, census data, or both (e.g., incorrect, or out-of-date mail, email, and other contact information).
• No formal policy for handling returned mail or undeliverable email.
• Lack of a policy for handling uncashed checks (as reflected for example, by the absence of an accounting journal or similar record of uncashed checks, a substantial number of stale uncashed distribution checks, or failure to reclaim stale uncashed check funds in distribution accounts).

An Ounce of Prevention

Perhaps the best way to deal with missing participants is to ensure a robust and effective communication strategy. This not only means staying in contact with existing plan participants but ensuring information on separated or retired employees is kept accurate and up to date. Communication best practices may include:

• Ensure that all plan communications are written in plain English and are easy to understand. Also, it may be helpful to offer non-English assistance when appropriate.
• Be sure to focus on the subject of the communication first. For example, clearly state the purpose of the exchange is to provide details on how to start benefit payments or to request updated contact information.
• Highlight the various ways to contact the plan either through a website or toll-free customer assistance.
• Create a process that educates, tracks, and informs those at various points across the retirement plan ecosystem. Review the onboarding and enrollment process for new hires and exit process for separating employees to confirm and update essential details.
• Educate employees about how the retirement plan can help to consolidate accounts from prior employer plans or rollover IRAs.

Missing Participant Searches

The DOL has provided a series of best practices to consider when searching for missing participants, including:

• Checking related plan and employer records for participant, beneficiary and next of kin/emergency contact information.
• Checking with designated plan beneficiaries (e.g., spouse, children) and the employee’s emergency contacts (in the employer’s records) for updated contact information.
• Using a credit-reporting agency, or a proprietary internet search tool to locate individuals.
• Attempting contact via other available means such as email addresses, telephone and text numbers, and social media.
• If participants are nonresponsive over a period of time, using death searches (e.g., Social Security Death Index) as a check and, to the extent such search confirms a participant’s death, redirecting communications to beneficiaries.
• Reaching out to the colleagues of missing participants by, for example, contacting employees who worked in the same office (e.g., a small employer with one or two locations) or by publishing a list of “missing” participants on the company’s intranet, in email notices to existing employees, or in communications with other retirees who are already receiving benefits.

Contact Us

Finding missing participants can be a time consuming and challenging task. That is why it is important to implement an effective communications program to reduce the possibility of lost contacts. If you have questions about the information outlined above or need assistance with a benefit plan audit or another issue, Wilson Lewis can help. For additional information please call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.