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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