Dealing with Returned Mail

[mmcourt]

We mailed hard copies of our SAR, and of course a large percentage were returned due to bad addresses. The prior administrator stored the returned mail for 7 years, creating a lot of boxes with paper in them that we will never access. I would like to rid myself of these boxes. Can I:

1) make a note on the spreadsheet that was used for creating the mailing, noting that it was returned and why, along with any additional action taken, such as if the letter was resent to an updated address provided by the Post Office; or

2) scan the front of the envelope and store in an electronic file.

Any advice would be much appreciated.

[My 2 cents]

Putting returned mail in boxes is totally unsatisfactory. The plan administrator has a fiduciary and statutory obligation to get all required notices into the hands of the participants on a timely basis. Failure to do so would, properly, subject the plan to penalties.

As the DOL has recently emphasized, the plan administrator has an affirmative duty to conduct a diligent search for everyone whose current whereabouts are not known. Returned mail is evidence that you don't know where someone is.

Returned mail = affirmative fiduciary duty to hire a search firm (or at least start contacting known family and associates) to find the person.

Out of sight, out of mind is a violation of ERISA and the Internal Revenue Code if one is talking about terminated participants with vested rights.

[jpod]

Let's be real: we're talking about SARs here.

[My 2 cents]

Let's be real: we're talking about SARs here.

Now, maybe, but how about plan provision requiring that vested benefits be paid no later than NRA? Or RMDs?

Suppose you want to terminate the plan. Do you think it will be easier to find people you haven't heard from in 15 years?

Besides which, is there any kind of per person per day penalty for failing to distribute SARs? I have to ask because, working on defined benefit plans, it's been years since I had any involvement with SARs. And what about mandated periodic account statements. Is there a penalty for not getting them into the hands of participants?

[jpod]

Unlike you I didn't think the OP was looking for a lecture on plan administration practices. I was only suggesting that heroic measures aren't necessary for SARs presumably mailed in good faith to the last known address but which have been returned.

[mmcourt]

OK, yes, I understand the reality of using every measure possible to locate people for the reasons you note above. Personally, I think that is the real reason ERISA requires we mail these things out every year.

But, the real question is - after exhausting all measures, am I really required to store the hard copy as evidence? I would prefer to document the steps taken to locate the individual, then shred the hard copy. All of these boxes of paper are driving me crazy! And I would think the Fire Marshall would agree. However, storing boxes of paper for seven years vs. being tagged and possibly fined in an audit - I'll take the storage problem.

[RatherBeGolfing]

But, the real question is - after exhausting all measures, am I really required to store the hard copy as evidence? I would prefer to document the steps taken to locate the individual, then shred the hard copy. All of these boxes of paper are driving me crazy! And I would think the Fire Marshall would agree. However, storing boxes of paper for seven years vs. being tagged and possibly fined in an audit - I'll take the storage problem.

You do not need to keep 7 years of returned mail (or one year for that matter). Scan and shred away.