How to Easily Find Lost Benefit Plan Participants

by Thomas C. Lawson, CFE, CII

It is common knowledge that in-house and third-party benefit plan administrators regularly run across lost benefit plan participants for reasons such as an expired forwarding address file, death,etc.

Since 1988 the need to locate missing people who terminate employment and have benefits due from a qualified p an has increased significantly. These past employees leave without a forwarding address, an address expires because they move often, or perhaps they die.

Other contributing factors to this problem include shortened post office forwarding order times, both the IRS and SSN abandoning their letter-forwarding programs, and in many cases mismanagement by administrators.

For years ERISA, as the guiding statutory body, was loathe to provide enough incentive for administrators to do more than simply be aware that they had unresolved matters with their missing participants.

Title 29, Part 4050.4 became recognized as the savior to those hard-to-find folks who had to wait for an administrator to get them an updated statement, a distribution, or their plan termination papers.

Title 29, or what has become known as the diligent effort requirement, has dramatically stimulated the need for administrators to increase their efforts to identify and locate missing participants.

Plan terminations cannot be effected; distributions cannot be made until administrators clearly demonstrate a diligent effort in locating missing plan participants.

In the event the companies are unable to locate the missing people internally, the law is very clear. To meet the more stringent ERISA requirements, companies are required to perform actual third-party due diligence in an attempt to locate a lost plan participant. This endeavor demonstrates to both the IRS and the PBGC that every reasonable effort has been made to locate the missing participant before surrendering the plan.

Neither the PBGC or the IRS publishes specific guidelines as to what constitutes a diligent effort; but with the advent of, and its systematic, proven results in locating missing plan participants, an industry standard has been created by which these governing boards can more easily determine if a diligent effort has been made.

However, if you have the time and resources to conduct these searches on your own, you can use credit reporting agencies, internet search tools including social media, or do yourself a favor and use our commercial locator service.

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