Missing Participant and Uncashed Checks


As a plan sponsor of a company retirement plan, it is important to have a process for locating missing participants and notifying participants of uncashed checks. Failure to do so can result in penalties and fines from regulatory agencies, as well as potential litigation from participants.

Missing participants are those who cannot be located by the plan sponsor due to an address change or contact information change. Most retirement plan recordkeepers will track returned participant mail and can provide a report of anyone with an incorrect address. These participants may have a vested balance in the plan, and it’s the plan sponsor’s responsibility to make a prudent effort to locate the participant. All steps taken to locate the participant should be documented, especially if the participant is not located. If the Department of Labor (DOL) questions the plan sponsor about a missing participant and the plan sponsor’s effort to locate the participant is well documented, there is a much lower possibility of penalties or fines.

The DOL provides guidance on how to locate missing participants and sets the standard for reasonable search efforts. To locate missing participants, plan sponsors can use various methods such as mail forwarding services, online search engines, credit reporting agencies, commercial locator services, social media and even asking known acquaintances. Typically, retirement plan recordkeepers and third-party administrators have resources to assist plan sponsors in the location effort.

In addition to locating missing participants, it is the plan sponsor’s responsibility to notify any participants who have an uncashed check from the retirement plan. Similar to the missing participant process, it’s important to document the steps taken to notify someone of an uncashed check in their name. If a notification letter is returned to the sender, the plan sponsor should follow the missing participant location process find a better address to mail the notice.

Plan sponsors should check with their recordkeeper, third-party administrator or plan advisor to determine what tracking and location resources are available. By using reasonable search efforts to locate missing participants and notifying participants with uncashed checks, plan sponsors can ensure compliance with regulatory requirements and avoid potential liability. Working with a retirement plan advisor can help ensure that your plan is compliant with the DOL guidelines. To learn more about establishing a process for missing participants and uncashed checks, contact the Innovative Investment Fiduciaries team at (856)-242-3343 or email resources@iifria.com.

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