Lost Participants in Retirement Plans

Lost participants can increase the risk of a fiduciary breach or operational defect as well as increasing the administrative cost of maintaining the lost participant’s accounts within the plan.

Both DOL and IRC regulations have many disclosures and reports which have to be provided to participants annually. If a terminated participant and the plan sponsor have not maintained a current address, a fiduciary breach or operational defect could occur.

This creates an opportunity for a plan advisor to create value for their plan sponsor clients in assisting them in managing terminated participants who have not provided current addresses.

The following documents from the DOL and Treasury outline the processes advisors can follow in assisting plan sponsors in properly documenting they have followed the proper steps in locating lost participants.

Department of Labor Bulletin

This bulletin explains how  fiduciaries of terminated defined contribution plans can fulfill their obligations under ERISA to locate missing participants and properly distribute the participants’ account balances.

Treasury Resources

Missing Participants and Beneficiaries and Required Minimum Distributions – 403(b) Plans