Posted by Saaib Uppal
In one of our previous blogs Mind Watching My Stuff for a Minute?, we discussed how to go about finding a participant who is unresponsive to communications from the plan sponsor. A method that we had detailed was a Letter-Forwarding Service provided by the IRS. At that time, forwarding letters on behalf of individuals, companies, or organizations that controlled assets due to a missing plan participant was considered to fulfill a humane purpose. Since the release of the original Revenue Procedure in 1994, several alternative missing locator resources have become available. In fact, Rev. Proc 2012-35 indicates that the Service “no longer considers locating a missing taxpayer who may be entitled to a retirement plan payment or other financial benefit from an individual, company, or organization to be a humane purpose for which the Service will provide letter-forwarding services.”
Now that the IRS has moved the goal posts, where do plan sponsors turn? The Social Security Office offers a similar service but for a $25 charge per letter. Also, additional information is required such as the person’s place of birth, the father’s name, and the mother’s full birth name. As mentioned in our previous blog and hinted to in the IRS release, plan sponsors can look into other services such as Google search, commercial locator services, and credit reporting agencies. If all else fails, per our blog Well, What Do We Do Now? if the participant can’t be located, some options the plan sponsor can pursue include Individual Retirement Plan Rollovers, Federally Insured Bank Accounts, and others.
As a plan sponsor, if you decide to select a prudent investment alternative for the rollover funds, you should ensure your decision follows the safe harbors for selection for IRA providers and initial investments. Do you need more information regarding these safe harbors? Look for our upcoming blog entry on that exact topic! I know the anticipation is tense and you can’t wait, but try to keep your mind on other things to make the week fly by. Might I recommend a game of football? Just keep your eye on those goal posts!