New Guidance on Locating Missing Retirement Plan Participants

September 2014Articles For Your Benefit

On August 14, 2014, the U.S. Department of Labor issued updated guidance to plan administrators and other fiduciaries as to their obligations to locate missing participants to complete benefit distributions. While the guidance technically applies only in the context of the termination of a defined contribution plan, it is helpful in other circumstances as well.

This new guidance, Field Assistance Bulletin (FAB) 2014-1, replaces a similar publication that dates back to 2004. It was prompted primarily by the discontinuance of the letter-forwarding programs that previously had been maintained by both the IRS and the Social Security Administration and had proven to be effective and inexpensive means of reaching these lost participants.

Required Search Steps

Acknowledging that reasonable expenses incurred in connection with the search may be charged to the account of the missing participant, FAB 2014-1 lists four low-cost search steps that are to be taken in all cases. These steps, which need not be taken in any particular order, include the following:

  1. Certified Mail – Fiduciaries should attempt to contact missing participants by certified mail using the last known address.
  2. Check Related Plan and Employer Records – It is conceivable that the employer or records relating to another employer-sponsored plan, such as a group health plan, may have current information.
    To address any privacy concerns, a plan fiduciary can ask that the employer or other plan fiduciary reach out directly to the missing participant or forward a letter to the missing individual, asking that he or she contact the plan fiduciary.
  3. Check With Designated Plan Beneficiary – It is possible that an individual whom the missing participant has designated as a beneficiary (e.g., spouse, children, etc.) may have, or be able to obtain, more current contact information. Again, if there are privacy concerns, the plan fiduciary can request that the designated beneficiary contact the missing individual or forward a letter to the missing individual.
  4. Use Free Electronic Search Tools – Plan fiduciaries must make reasonable use of internet search tools that do not charge a fee. These tools include internet search engines, public record databases (such as those used for licenses, mortgages and real estate taxes), obituaries and social media.

Additional Search Steps

If the four required search steps do not yield any results, the plan fiduciary then must consider whether additional steps may be appropriate, in light of the size of the account balance and the costs of further search efforts. Among the additional search options that might be considered are the use of fee-based internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases and analogous services.

Distribution Options

The Department of Labor recognizes that there will be situations in which, despite having taken all required search steps, as well as such additional steps as are reasonable under the circumstances, the missing participant cannot be located. In such cases, the preferred option for distribution of the benefits is rollover to an individual retirement account (IRA), following the same rules, which are applicable for mandatory rollover distributions.

Other options include depositing the funds into an interest-bearing, federally insured bank account in the name of the missing individual or transferring the account balance to a state unclaimed property fund. However, in making the decision to utilize one of these options, the plan fiduciary must take into account the adverse tax consequences to the participant and consider whether a searchable database is maintained by the applicable state that would enable the participant to locate the missing funds. Finally, the guidance confirms that a distribution with 100 percent income tax withholding, effectively transferring the entire account balance to the IRS, is not an acceptable option for fiduciaries.

Some fiduciaries have expressed concerns about their ability to establish individual retirement accounts or bank accounts for missing participants, particularly in light of the Customer Identification and Verification Provisions (CIP) of the Patriot Act. In its guidance, the Department of Labor indicates that, in the case of employee benefit plans, this verification will be required only when the participant contacts the financial institution to claim or exercise control over the account and not when the plan initially establishes the account in the name of the missing participant.


Although FAB 2014-1 applies specifically in the context of a terminated defined contribution plan, the guidance is helpful in determining appropriate procedures for locating missing participants in other circumstances. Best practices would dictate that, at a minimum, the four required search steps be undertaken in all cases.

For more information regarding this topic, please contact Susan Foreman Jordan at (412) 391.1334 or [email protected] or any member of the Employee Benefits and Compensation Planning Practice Group .