missing participants

[EGB]

Assume an employer maintaining a DC plan (which is not being terminated) has exercised its fiduciary duty to locate a number of participants in the plan whose account balances are payable, but has been unable to locate them (ie, assume diligent effort has been made - locator firm hired, IRS locator service utilized, etc.). In a DC context, what can the employer safely do other than to continue to maintain these account balances? Can the money be transferred to an interest bearing account for the account of the missing participants? Can the money be trasnferred to an interest bearing account for the account of the employer (probably not)? Can the plan be amended to provide that, in the event a participant cannot be located after diligent effort has been made, his/her account will be treated as a forfeiture under the plan (either reducing future employer contributions or reallocating to other participants)? I am aware of the missing participant program for DB plans, but would like to know what others are doing with this situation in a DC context (and when there is no plan termination).

[KJohnson]

Amounts can be forfeited as long as your plan provides that the benefit is subject to reinstatement if a claim is subsequently made. 1.411(a)-4(B)(6).

[Alf]

With this approach, the only real problem will be when the plan terminates. Then, you will have to purchase an annuity or arrange for an interest bearing account to be established (which will be extremely difficult for the small sums of money that are usually involved).

Tom

[KJohnson]

Some typical problems with savings accounts is that 1)there is often problems opening them in names for which you do not have signatures 2) for small amounts, service fees often take the entire amount of the accounts in a few months/years.

I believe DOL's problem with escheating to the state is based on preemption of state escheat laws. However, if you wrote the escheat provision into your plan document I don't know what their position would be.

I've seen some plan language about buying savings bonds in the name of the participant. This takes care of the problem of the service fees eating into the balance, but who physically holds the bond? Anybody had experience with this?

[Guest B Husani]

How can we find missing beneficiaries (life insurance and defined benefit pension) for whom we do not have social

security numbers?

What is our obligation to do so? If we have made a reasonable effort,(And what constitutes a reasonable effort? Do we need to hire a locator firm? Can they locate someone without a social security number?)

what then? Do we turn the money (in the case of pension) over to the PBGC? Will the PBGC try to locate them?