TRANSCRIPT:

Tom Hawkins: Welcome to another edition of the RCH Consolidation Corner Channel, where we provide you with audio content that explores key issues in the preservation and consolidation of retirement savings. In this episode, we focus on research conducted by RCH on optimizing electronic searches – also known as “e-Searches” – for missing plan participants.We hope you’ll find the audio enjoyable and informative.

NARRATOR: Research conducted by Retirement Clearinghouse (RCH) enhances our understanding of locating missing 401(k) participants, while complementing Department of Labor guidance. Released in January 2021, the study "Improving the Effectiveness of Electronic Missing Participant Searches" provides valuable insights for plan sponsors using electronic searches.

Despite helpful DOL guidance offering best practices, no definitive rules exist for what constitutes a thorough search for missing participants. This uncertainty leads many plan sponsors to employ various search techniques without a clear understanding of their effectiveness in different scenarios.

To address these challenges, RCH conducted a six-month research initiative led by COO Ricki Ingalls, Ph.D. The team evaluated 17 different electronic search databases across five categories, testing each against small participant groups. They identified a specific credit service bureau search as the most effective standalone option, while also developing an optimized electronic search that employed a proprietary algorithm combining data from multiple search databases.

The research thoroughly tested both the standalone credit bureau search and the optimized electronic search against four control groups: participants with presumed good addresses, those with likely bad addresses based on returned mail, individuals with no address on file, and those believed to be deceased.

Three significant findings emerged from the study.

First, there was a surprisingly high percentage of outdated addresses (33.2%) in the "high-confidence" group—double the expected rate. This suggests many 401(k) plans may have a hidden problem with stale addresses requiring periodic verification, even without obvious warning signs.

Second, the optimized electronic search substantially improved reliability across all groups compared to the standalone credit bureau search, boosting reliability by 3.1% for determining life status and 10-20% for finding updated addresses.

Third, the study clarified when electronic searches work best—highly effective for periodic address updates but less successful for locating participants with no address on file. The research concludes with four specific recommendations to help plan sponsors maximize the effectiveness of their electronic search programs. If you're interested in learning more about the study, the survey is available for download in a link provided in our show's transcript.

Download Link to Study: https://info.rch1.com/missing-participant-esearch-study

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