Diligent Search

[Pension RC]

I am involved in a plan termination. We recently mailed the NOIT, Notice to Interested Parties and NOPB's to 67 of the 73 participants. However, we were unable to find addresses for 6 participants after asking the plan sponsor and using a commercial online locator service. I understand that we may not have fulfilled the diligent search requirement yet, as we haven't yet inquired about any beneficiaries. Must this search be done by 60 days prior to the proposed termination date in order for the notice mailing to be timely? From the PBGC standard termination instructions, I get the sense that it only needs to be done prior to filing the post-distribution certification. Is that correct?

Thanks for any responses!

[Effen]

I think it somewhat depends on what you intend to do with these people. If you intend to turn the over the the PBGC as a lost participant, you will need to satisfy them that you did a diligent search. Also, keep in mind the amount you will need to turn over to the PBGC to cover their liability can be significantly more than the assumed lump sum payment.

Don't let the sponsor fall into the trap of thinking they don't really need to look because the PBGC will take them. This ultimately will be a very expensive solution between the added liability, and all the extra admin necessary to jump through the PBGC hoops.

I wouldn't worry too much about the 60 requirement, but you certainly should be looking by then very early in the process and keep searching throughout the process. If the PBGC isn't satisfied with what you did, they will make you do more, which will delay the entire process.