Missing Participants? Document The Search



Regulators at both the IRS and the DOL have been urging increased effort to address the challenge of missing participants and distribute benefits on schedule. Experts remind plan sponsors that diligent action is insufficient: search efforts must also be carefully documented. Read on for guidance.


Taking Action and Documenting Too

Retirement plan sponsors are responsible for ensuring that all plan participants receive their benefits on schedule. Because missing participants pose chronic and serious challenges, the Department of Labor encourages proactive attention to the associated problems. Specifically, in 2021, the Employee Benefits Security Administration (EBSA) instructed retirement plan fiduciaries to: Maintain complete and accurate census information; Communicate with participants and beneficiaries about their benefit eligibility; and, Implement effective policies and procedures to locate missing participants and beneficiaries. Plan sponsors will find it helpful to brush up on EBSA’s guidance in three parts, which is available right here: Best Practices; Compliance Assistance; and, Field Assistance Bulletin.


Action on the federal guidance is essential for plan fiduciaries–and so too is carefully documenting all action. Thomas Hawkins, an expert with the Retirement Plan Clearinghouse, reminds us: “If a search for a missing participant is not properly documented, is it a diligent search? To regulatory authorities who may scrutinize a plan sponsor’s search efforts, the answer is decidedly “no.” For a regulator to consider a search to be diligent, it must be well-documented, and to do otherwise can result in audits, penalties and increased fiduciary risk.”  Specifically, Hawkins has shared these 5 tips for properly documenting missing participant searches with 401k Specialist:


  1. Explain why the search is needed.
  2. Explain the search methodology used.
  3. Record the search results.
  4. Record action taken related to the search results.
  5. Include detailed descriptions of search services conducted by third parties.


Given the fiduciary obligations of plan sponsors, Hawkins observes that demonstrating an understanding of why a missing participant search is needed is a very wise move: “Clearly documenting the reason(s) prior to conducting searches is important to show that a sponsor has adequate situational awareness guiding their subsequent search activities. It also helps categorize missing participants so that an appropriate search methodology can be applied.” Typically, missing participant searches are needed when:


  • A terminated participant’s account has no recent activity
  • A stale address or returned mail
  • An uncashed distribution check
  • A pending required minimum distribution (RMD)
  • Advanced age or other question of life status
  • A plan termination, where required mailings generate returned mail or unresponsive participants


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Good To Do: Follow Up

Appropriately following up on missing participant searches, and documenting having done so, is essential. Specifically, Hawkins recommends that plan sponsors “compare  results with the participant data that they currently have on file,” conduct additional search activity accordingly, and keep a record of results with an interpretation, including:


  • No data returned
  • Data is obtained, but is the same as current data on file
  • Data is obtained, but differs from current data on file
  • Participant data is positively verified by the actual participant, a surviving family member or their beneficiary


As you get to work on upgrades to your missing participant protocols and documentation, remember to upgrade your protection plan too. Don’t find yourself facing even the allegation of a fiduciary breach alone: a defense attorney with ERISA expertise costs about $600—-per hour. Obtain protection from Colonial, where a whole year of Fiduciary Liability coverage is less than what you’d pay for one hour with that lawyer if a crisis hits. Plus, we even include Cyber Liability coverage to protect your business and retirement plan in the event of a cyber breach. Afterall, cyber breaches can escalate into fiduciary breaches too. Obtain efficient and effective coverage for yourself in minutes today:


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