Question: What are the risks of losing track of a plan participant? There are a few people who remain “on the books,” in spite of trying many times to reach them.
Answer: That’s an important question because there are serious potential consequences. Losing track of a participant can be considered a breach of fiduciary duty, according to a 2014 Field Assistance Bulletin from the Department of Labor.
Plan sponsors must be diligent in their attempts to contact participants with a vested account using a variety of tools, including certified mail, checking all plan and employer records, sending an inquiry to the designated beneficiary, and using free electronic search tools. In cases where the participant remains missing, the plan must consider additional methods of locating them, such as a commercial locator service, crediting reporting agencies, and investigation databases. If the plan fails to locate a participant and hasn’t taken proper steps to do so, there is a potential for the plan to be disqualified.
We suggest you click here, to read more on this topic in the DOL’s Field Assistance Bulletin mentioned above in this IRS Employee Plans Memorandum, and in this letter to the DOL from the American Benefits Council.