When an employee leaves your company, their status as a participant in the company’s retirement plan is often an afterthought. However, you have a fiduciary obligation to distribute the participant and beneficiary vested balances accrued under the plan, so they cannot be ignored. Unfortunately, what often happens is the participant moves and does not keep you, their former employer, informed, running the risk that the participant then becomes “lost.”

If we have good addresses for your terminated participants, we will identify participants subject to your plan’s cash-out provisions and can initiate the distribution process for you. The sooner they are paid, the less likely these participants will become ‘lost.’ Since not all participants are subject to this provision, however, you need to establish a procedure to maintain good records for your terminated employees. There is a growing concern within the Department of Labor that employers and plan sponsors are not making enough effort to find their lost participants. Your Plan Consultant is available to work with you on this important plan operation.

If it should occur that a participant appears to be “lost,” the following search methods will need to be utilized in an attempt to locate them:
Send a notice by certified mail to the last known address.

  • Determine whether your records or the records of another plan you maintain (e.g. group health plan) has a more current address
  • Attempt to contact anyone who has been named as a beneficiary of the participant (e.g., spouse, child)
  • Use free electronic search tools – internet search engines, public record databases, obituaries or social media

These methods involve nominal expense and such potential for effectiveness that the Department of Labor believes every plan must employ these methods, regardless of the size of the account, or you as a plan fiduciary, have not satisfied your fiduciary obligations. Depending on the size of the participant’s account and cost, additional search steps may be warranted. If a participant cannot be found by the above methods, we can initiate an address search, for a small fee, through a locator service.