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- The Missing Participant Problem
- What is a Missing Participant?
- Why Plan Sponsors Should be Concerned
- What Causes Missing Participants?
- The Magnitude of the Problem
- What Regulations Apply to Missing Participants?
- Sources of Uncertainty for Plan Sponsors
- Best Practices for Finding Missing Participants
- What to Look For in a Search Service
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Why Plan Sponsors Should be Concerned About Missing Participants
- For plan sponsors, missing participants can cause administrative burdens, increased plan costs and fiduciary risk.
- Missing participants are viewed as a more-critical problem when they are at or near a distributable event (ex. – a required minimum distribution). When a distribution occurs or is due, the Internal Revenue Service (IRS) is keen to collect on deferred taxes, and the Department of Labor (DOL) has a natural interest in ensuring that participants receive the benefits owed to them.
- For plan sponsors, missing participants can lead to plan audits, where the plan’s policies and procedures for locating missing participants can be scrutinized.
- In the present environment, plan sponsors – particularly sponsors of active plans – complain that they operate with insufficient guidance in locating missing participants, and are sometimes subject to inconsistent enforcement actions.
- For participants, not have a correct mailing address may result in a range of sub-optimal outcomes, including not being aware of major plan changes (ex. – investment changes, recordkeeper transitions, or plan terminations), missed transactions (ex. – uncashed checks) or even forgetting about the account completely.
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