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AlbanyConsultant

purged demographic information problems

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The discussions of us taking over this ERISA 403b plan were going well, until they mentioned that they "purge" their employee records every couple of years.  They are currently with a low-cost (and low-service, but you didn't need me to say that part, did you?) recordkeeper that never questioned any lack of data or plugged data, and there was no TPA (the plan sponsor did their own employer calculation and their auditor did the 5500).

After they revived me, I started ticking off all the potential problems: RMDs, no ability to deal with missing/lost participants, proper coding of 1099-Rs, etc.

It's one thing if it's a smaller plan and you can get your hands around all the participants - maybe they know that there is no one who is 70 years old, and maybe they can track down all the terminated employees with balances.  But it's a different story when it's maybe 100 or 125 people in this situation, and the whole HR department is new in the past 6 months.

I've asked them to take a second look around for information, but let's say they really don't have dates of birth for those who separated from service more than three or four years ago.  Possibly a bunch of the addresses are no longer valid and no one has followed up on them... or are "c/o the plan sponsor".  On a scale of "very" to "run away". how screwed are they?  There's no easy fix to this sort of stuff that I can see.

Any suggestions on how to get this plan back on the straight and narrow without it costing a fortune are appreciated, thanks.

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For your worst case, if they do not at least have SSNs for these individuals, it may be hopeless.  With SSN typically used as an identifier in valuation systems, I would hope the recordkeeper has it in their records.  I would expect them to have the DOB too, because it should have been loaded while they were employed.

If they have at least the SSN, some $ and some time could get the missing DOBs and addresses.  We use Millennium Trust for auto rollovers. They also have a reasonably priced search service that does a good job of finding missing participants.  Their search results usually include DOB and an address. Sometimes, they even find a phone number.  Other search services could probably do the same.

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I would "run" unless you get a written commitment/service agreement (and commensurate fees) for the client to run a TOTAL data clean up project. I would also further instill in the client that they have fiduciary duty to maintain records sufficient to properly administer the plan.  A plan like this would have DOL and IRS auditors salivating.

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23 hours ago, Kevin C said:

For your worst case, if they do not at least have SSNs for these individuals, it may be hopeless.  With SSN typically used as an identifier in valuation systems, I would hope the recordkeeper has it in their records.  I would expect them to have the DOB too, because it should have been loaded while they were employed.

If they have at least the SSN, some $ and some time could get the missing DOBs and addresses.  We use Millennium Trust for auto rollovers. They also have a reasonably priced search service that does a good job of finding missing participants.  Their search results usually include DOB and an address. Sometimes, they even find a phone number.  Other search services could probably do the same.

I'm hopeful for SSN, because I believe that the former rk used that as the identifier.  I'm hoping at least those are real.  I had mistakenly thought that I needed SSN and DOB or last known address to do a participant search, but I guess SSN is usually enough, so that should help somewhat.  DOBs are trickier... there are so many places that just don't get them, it boggles my mind.

 

CuseFan, even if I were to "run", I couldn't leave them in the lurch with just a "yeah, you're in deep trouble, best of luck, bye!" (and I'm not suggesting that you would, either).  Yes, I will have to impress on them that this work will be above and beyond the expected admin costs, but it is necessary if they want their plan to be correct; I think they know they are in trouble and want to get back into safer waters... the question is how much are they willing to spend to do so.

I'm thinking that, as a large plan, this is audited every year... how has this not come up before?

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