Lost and Not Yet Found: U.S. Retirement Plan Sponsors’ Duties Regarding Missing or Unresponsive Plan Participants

Each year, Americans place billions of dollars in retirement accounts in preparation for their retirement. Yet, when the time comes to receive those benefits, thousands of participants are nowhere to be found or do not cash checks that have been sent to them.

A missing or unresponsive plan participant typically has accrued benefits in their account, but their plan sponsor cannot locate the participant to distribute the benefits, even after reasonable search efforts, or does not receive responses to communications sent to them. In addition, correction of a plan failure under the Internal Revenue Service Employee Plans Compliance Resolution System may require payment of additional benefits to terminated participants. There is a variety of reasons that may lead to a participant’s being deemed missing, such as a participant’s failing to update contact information after moving, switching phone providers, changing their name due to a marriage or divorce, or passing away with their beneficiaries unaware of their benefits.

This article summarizes a plan sponsor’s duties regarding missing or unresponsive plan participants and alternative methods for disposition of related plan amounts.