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Go Online to Find Missing Plan Participants, DOL Says
Track those who've left funds in a 401(k) by using Internet search tools

By Stephen Miller, CEBS  8/22/2014
 

New guidance for tracking missing participants in 401(k) or other defined contribution plans takes into account improved Internet search capabilities that have become available to plan sponsors over the past decade.

While the Department of Labor's (DOL) Field Assistance Bulletin 2014-1 applies in the context of terminating defined contribution plans, “the guidance can be instructive for fiduciaries trying to locate missing or unresponsive participants in other retirement plan contexts as well,” according to a posting by law firm Porter Wright. “If nothing else, the DOL formalized its foray into modern technology by essentially telling plan fiduciaries to ‘Google it,’” the firm noted.

“The methods described under FAB 2014-01 reflect the growing ability to locate a missing participant through free internet searches and other electronic databases,” adds Proskauer’s ERISA Practice Center.

“Administrators of ongoing plans may want to consider periodically utilizing one or more of the search methods described in the FAB to update plan records and attempt to solicit distribution elections from missing distribution-eligible participants,” recommends law firm McGuireWoods LLP. “However, distributing a missing participant’s benefit from an ongoing plan in the absence of an election by him or her generally would not be advisable unless the distributable benefit were $5,000 or less, and thus eligible for transfer to an IRA under the DOL’s safe-harbor regulation for automatic rollover distributions.”

Search Options

Under the new guidance, plan fiduciaries can start searching for missing ex-employees who have funds invested in the employer’s plan by using free Internet search tools, which may include search engines, public records, obituaries available online and social media, the DOL advised. Plan sponsors can also send a certified letter to the employee’s last known address, review available employment and health plan records and check with the designated plan beneficiary.​

But, “If the free or cheap options don’t work, fiduciaries can’t stop there,” advised benefits attorneys at law firm Bryan Cave. Fiduciaries need to consider how prudent it would be to use other tools, such as commercial locator services, credit reporting agencies, information brokers and investigation databases. “Many of those services can be quite cost-effective, so it’s important to research them thoroughly before dismissing them out of hand,” according to the post.

“A plan fiduciary should consider the size of a participant’s account balance and the cost of further search efforts in deciding if any additional search steps are appropriate,” the DOL stated. “The exact steps will depend on the facts and circumstances.”

Distribution Options for Terminating Plans

FAB 2014-1 also discusses circumstances when, despite their use of the available search steps, fiduciaries of a terminating defined contribution plan will be unable to locate missing participants. “In such cases, the plan fiduciaries will have no choice but to select an appropriate distribution option,” such as rolling funds over to an individual retirement plan, the guidance states. This requires “the exercise of fiduciary judgment with respect to the choice of an individual retirement plan trustee, custodian or issuer to receive the distribution, as well as the choice of an initial investment in the individual retirement plan.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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