Missing Participants

[Guest lindamichals]

I have a plan(nursing home) that has been carrying account balances for as long as 30 years. Back then, no SS#'s were required for our software. The client has been trying to go through 30 years of records for the SS#'s since they are now shutting down the plan. Has anyone had a similiar situation? The letter forwarding program and automatic rollover program is useless without SS#'s. Any other alternative available to get the money out the plan with no SS#'s? Thanks.

Linda Michals

[WDIK]

There are participant locater services (at least one of which is listed here on BenefitsLink) that can do a search based on the last known address if the social security number is not available.

[K-t-F]

I ran into this problem and contacted the payroll company who subscribed to one of these services. They found the person. I figured they might use one of these services ..... and they do. Just a suggestion.

[david rigby]

Search for deaths here: http://ssdi.genealogy.rootsweb.com/

[Guest lindamichals]

Search for deaths here: http://ssdi.genealogy.rootsweb.com/

that's a good suggestion to find the SS#, but if the participant is deceased, how would the plan get the last know address or a beneficiary?

[JanetM]

Death index shows last city and state. Start searching obituaries. Write letter to local newpaper to see if they will do search of their death notices.

[Guest Kabert]

First, I'd make sure the plan administrator's procedures are changed so this will never happen again. For instance, a once a year check should be done to ensure accuracy of addresses. For those that are returned, they should be sent to a participant search firm or the SSA or IRS letter-forwarding program. The EPCRS Rev. Proc. requires such a procedure be put in place.

Second, the DOL recently came out with guidance on searching for missing participants in a DC plan. It makes clear that this is a fiduciary issue. Basically, the rules say a serious effort is required to locate and pay out missing participants. Find this guidance on the DOL/EBSA website.

Third, I'd contact one of the participant search firms out there. I've used one called PBI -- Pension Benefit Information, I think it's called. There's another good one in Ohio whose names escapes me now. I would use one of these rather than the generic person-search firms that advertise on the internet. They usually charge @$8/name. I've always run the fees through the plan as a reasonable plan expense.

Fourth, I'd examine whether there are any 401(a)(14) or 401(a)(9) violations -- i.e., people who should have been commenced at 65, but definitely no later than age 70.5. Note that the 70.5 rules have changed at least three times over the last 20 years, and if you have people missing for 30+ years, different rules perhaps should have been applied to them.

Fifth, if you have 401(a)(9) (age 70.5) violations, you have VCP issues and each participant has excise tax issues. See the current EPCRS Revenue Procedure for discussion of the issue and a possible way out of the excise tax.

Sixth, there may be plan qualification concerns if the plan's terms re: timing of distributions have not been followed for so many years. There used to be a rule in the 4975 (I think) regs saying that a pattern of repeated 401(a)(9) violations under a plan may call into question the qualification of the plan. I've never seen the rule applied in practice though.

Finally, it sounds as if you have the result of years of neglect on your hands. Best to get it cleaned up before an audit uncovers it, a participant or participant's estate sues for breach of fiduciary duty, etc.

[Guest mjb]

The problems of distributing assets of missing participants can be easly avoided by adopting a provision that permits forfeiture of the assets of missing participants who cannot be located after a reasonable search, e.g., through ss or IRS. The benefits will be restored prior to plan termination if the participant ever returns which rarely occurs. Keeping track of current addresses is too administratively burdesome and futile because employees do not provide new addresses. There should be a provision in the SPD reminding employees of their responsibility to provide a change in address if benefits are not withdrawn after termination.

Linda does plan permit forfeiture of benefits of missing participants? If not why not add it?