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Missing, But Not Forgotten (article)

Both the Internal Revenue Service (IRS) and Department of Labor (DOL) are committed to ensuring that all qualified plan participants and beneficiaries get their due, even if keeping track of them is a challenge for the plan sponsor.


A recent IRS Memorandum specifically addresses the issues relating to missing participants and beneficiaries and required minimum distributions.  As background, certain qualified plans are required to begin distributing minimum accrued benefits from the plan when a terminated participant reaches age 70½.  According to the Memorandum, the employer must take certain steps to locate a missing participant.  These include:

  1. Review of the plan and plan sponsor records for the individual’s contact information;
  2. Search publicly-available records or directories for alternative contact information;
  3. Utilizing a commercial locator service, a credit reporting agency or a proprietary internet search tool for locating individuals;
  4. Attempting to contact the individual by U. S. Postal Service (USPS) certified mail to the individual’s last known mailing address; and
  5. Attempting to contact the individual through any appropriate means, such as by email and phone.

As long as the employer follows these steps, then the IRS would not challenge plan qualification based on failure to provide the required minimum distributions.


The DOL has, arguably, more stringent standards that could also result in a breach of fiduciary duty if efforts are not made to ensure finding missing plan participants.  A few years ago, the DOL released Field Assistance Bulletin (FAB) 2014-01 providing guidance on locating missing participants, specifically as it relates to terminated defined contribution plans (see In Search of Missing Plan Participants, Benefit Beat, 9/09/14).  This FAB includes similar methodologies contained in the IRS Memorandum in an effort to contact missing participants. The FAB further suggests to verify the individual’s contact information with the human resources department, and in certain instances, with other employment-related records, as well as contacting the designated beneficiary, such as the spouse or child, for updated information.  Public records such as obituaries and social media could be additional sources.  The DOL has indicated that it will be providing further guidance in the near future for additional steps that could be taken to locate missing participants.


Best practices.  It would be prudent and best practice for employers and plan sponsors to have a procedure in place to annually review its attempt to locate missing participants.  If the employer/plan sponsor has a set process it follows consistently and regularly, it will go far in protecting it from a challenge either by the IRS or DOL.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. 
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