Posted by Saaib Uppal
Any Seinfeld fan out there would remember an episode in which a tourist asked George Costanza to watch over his bag for a minute. George agreed and then stood there as the man disappeared. Unable to wait because the man was taking a long time to return, George decided to just take the man’s clothes and start wearing them, arguing that he was, “still watching them.” Now, any casual viewer of the show would not be surprised as that’s George being George. However, what would you have done? For those of you rolling your eyes thinking that you would never be in that situation, how about something a little more realistic?
Say you’re a plan administrator of a Defined Contribution Plan that’s terminating and you can’t locate a participant. That would be a problem since all of the plan’s assets must be distributed as soon as possible after the termination date. All participants must be contacted for instructions on how to distribute their account balances.
If a participant does not respond, that participant is categorized as a “missing participant.” The dilemma is that plan administrators are unable to fully wind up the plan’s financial affairs. If you are in this scenario, you are expected to perform a “reasonable search” for the participant. If sending mail and e-mails doesn’t work, there are a few other routes that you can take to find the “missing participant,” including:
- Checking other employer records – The employer may provide other benefits (such as a health plan) that may have a more updated address.
- Checking with the designated beneficiary – Anyone named as a beneficiary by the participant may be able to provide valuable information.
- Using the IRS Letter-Forwarding Service – The IRS maintains a Letter-Forwarding Program. One of the valid uses is financial entitlement. The IRS won’t provide the participant’s address or even give feedback regarding whether the letter reached the participant for privacy reasons. A template of the letter to be forwarded must be provided for each specifically-identified participant. This is no charge for requests for 49 or fewer participants but 50 or more missing participants leads to a fee.
- Other various services – Google, commercial locator services, and credit reporting agencies.
But, what if nothing works and you seem to be chasing a ghost? There are several alternatives. What they are exactly will be revealed in an upcoming blog post. (Have to keep you coming back somehow!) Unlike what our friend George might say, one of them does not include keeping the money because as he experienced, when the rightful owner comes back, it can lead to a pretty awkward moment.
