"Do you know where your participants are?"


Those of us who have been around since the late 1960s remember the iconic television public service announcement that was preceded an announcement of the time: "It's 10 p.m., do you know where your children are?" The implication was that if you didn't know where your children were, perhaps your parenting skills needed improvement and your children could be in danger. A new announcement from the DOL has us asking, "Do you know where your former employees are?" In particular, those who still have money left in your company's retirement plan. If you don't, there could be serious consequences.

The DOL has announced a country-wide initiative to send requests to retirement plan sponsors, asking for current contact information for selected participants. Sponsors who cannot give accurate information may subject their plan to an audit. Importantly, the DOL considers it a breach of fiduciary responsibility if the plan sponsor cannot contact participants who have balances in the plan, unless a diligent effort has been made to locate them.

What constitutes a "diligent effort?" There is no definitive list, but here are some actions that we believe will show a diligent effort.

  1. Send a letter by certified mail, or a recognized delivery service like UPS, DHL, or Federal Express, to the employee's last known address, informing them about their retirement account and asking for them to make a decision as to its disposition. If the letter is returned because the address is incorrect, save the returned letter with a record of the date it was sent and returned.

  2. Attempt to contact the participant by phone, email, or text. Save a copy of the attempt to contact (either a paper or electronic record is sufficient).

  3. Do an internet search using Google, Bing, Yahoo, ask.com, or a similar search engine. There are also free "people search" sites like http://www.ussearch.com.

  4. Search for the participant on Social Media such as Facebook, LinkedIn, Twitter, etc.

  5. If you have a beneficiary form from the participant, try to contact the beneficiaries for information about the participant. If you remember the participant's spouse, children, parents, other relatives or friends, attempt to contact them for information.

  6. Check with your payroll company to find out if they offer a service to locate former employees. If checks were being directly deposited, the payroll company may be able to contact the former employee through their bank.

  7. Hire a commercial locator service such as http://www.employeelocator.com.

Even if you have followed these procedures, there is no guarantee that you'll locate the person. But keep the documentation so that you have proof you made a diligent effort to locate the participant and avoid a costly fiduciary breach.