Hunter Benefits Consulting Group



Missing Participant Best Practices

by Webmaster

Written by Kristina Kananen

As we all know the Employee Benefit Services Administration (EBSA) is charged with protecting the rights of qualified plan participants. This mandate extends to those participants who terminated employment and still have a vested benefit left in the plan, or the deferred vested participants. A fiduciary’s responsibilities to a deferred vested participant are the same as the responsibilities to participants who are still employed by the plan sponsor.

EBSA’s new best practices for plan fiduciaries provides clarity of the steps a fiduciary is expected to take to ensure all fiduciary duties have been fulfilled. The clarity, though somewhat daunting, should be very welcome to plan sponsors. EBSA based the best practices on the following situations they found over the years which showed a plan has a problem with missing or nonresponsive participants.

There are more than a few missing or nonresponsive participants

Years ago it was common for a plan to require a terminated vested participant to attain normal retirement age under the plan to receive their vested benefits. For some plans, this resulted in more deferred vested participants with account balances/benefits than active participants with account balances/benefits. This imbalance and the problem of missing participants has caused plan sponsors to rethink the position deferring payments when they realize their fiduciary responsibilities and liabilities are greatly reduced when terminated vested participants are paid out as soon as possible. Assuming they can be found, of course.

There are more than a few deferred vested participants who have attained normal retirement age but have not started to receive their benefits.

A participant who terminates close to retirement age has one eye on retiring, so they are unlikely to fail to ask about their benefits. However, if a terminated vested participant has been gone for many years, the process to find them to distribute the benefits to which they are entitled can be time consuming. Deferred vested participants have become very mobile in the last few decades. They can be anywhere.

Lack of complete census data for the deferred vested participants, missing dates of birth, partial social security numbers, no contact information for beneficiaries as well as incomplete or inaccurate contact information for the participant and beneficiaries.

Apparently, privacy concerns have caused many employers to be unwilling to share complete plan participant census information with their service providers, and in fact may even be reticent to ask the participant for complete data. This information is vital to ensuring participant rights and benefits under the plan. The plan should have complete census information for every participant, including information on their beneficiaries.

Plan sponsor has no policies or procedures for handling mail returned and undeliverable to the deferred vested participant.

Defined contribution plans with participant direction are required to provide quarterly statements and defined benefit plans are required to provide Annual Funding Notices to all participants. If such a statement or notice is returned as undeliverable, the Plan Sponsor should be notified and begin the process of finding that participant.

No sound policies and procedures for uncashed checks resulting in no accounting journal of checks issued and remaining uncashed. The plan has a large number of uncashed checks and fails to reclaim the uncashed check funds back into the plan/participant accounts.

A Plan Sponsor may not be aware that the benefit checks sent to participants have not been cashed, but only because they have not asked the investment platform. There was a practice of taking the funds from uncashed checks and treating those funds as forfeited. This practice is seriously frowned upon by EBSA and does not relieve the Plan Fiduciaries of the responsibility to provide the benefit payments to the deferred vested participants. The funds for the uncashed checks must be returned to the plan and the participant’s account balance reinstated. And yes, the deferred vested participants are included in the participant count to determine if a plan must have an audit attached to their 5500 filing.

Other practices to get deferred vested participants out of a plan were to escheat their account balance/benefit to their state of residence or to withhold the entire amount and pay it to the US Treasury. Both of these practices take the guarantees and features of a qualified plan distribution away from the deferred vested participant

The above indicators were found in plans where there was a sporadic attempt to contact deferred vested participants and beneficiaries. Those plans that had good procedures in place to keep the number of missing or nonresponsive participants to a minimum followed the Best Practices listed below.


Maintaining complete and accurate census information for all plan participants

Complete data ensures the correct person is identified and contacted regarding benefits. While it might be possible to have two participants with the same name, it is rarer for them to have the same birthdate and legally impossible for them to have the same social security number.

Periodically contacting current and former employees to confirm relevant contact information including:

Home and business addresses

Telephone numbers including cell phone numbers

Social Media Contact Info

Next of kin or emergency contact information

Plan Sponsors are required to provide information to plan participants on a periodic basis. This is an ideal time to ask if there is anything new for the participant.

Giving participants a reminder to notify the plan of any changes in contact info and providing an easy way to update their contact information with any plan communication

The Exit Interview is the ideal time to ensure the participant knows the benefits of keeping the Plan Sponsor informed of their current information.

Making it easy for the participant to provide new information ensures the participant will make some effort.

Don’t forget to remind the participant of their beneficiary designation before they ‘walk out the door’.

Participants often designate a beneficiary when they are first eligible for the plan and then forget about it. Reminding the participant of their designation will help to ensure the Plan Sponsor is not put in the middle between a current spouse and a former spouse, as well as to ensure the information the plan has on the beneficiary is complete and up to date. The beneficiary designation form should include more than the beneficiary’s name and relationship, such as the beneficiary’s address and social security number, just in case the beneficiary gets lost as well.

Flagging undeliverable mail or email as well as any uncashed checks for follow up

Don’t just put undeliverable mail in a drawer, look at it as a ‘to do’ item. The to do is to find out where the participant is now. The longer one waits to find a participant the more difficult it is.

Monitoring an online platform where participants can change their contact information and the information for their beneficiaries.

Investment platforms often provide the participants with the ability to log into their account. Logging in does not mean the participant is giving the Plan Sponsor information. Sometimes a feeling of animosity toward a former employer will keep a participant from providing information to the Plan Sponsor. Providing information to the company holding their assets is a different matter. Having the investment platform share that information with the Plan is important.

Asking participants and beneficiaries to confirm contact information upon login to online platforms.

This is a common practice for any number of website and should not cause any undue concern for the plan participants.

Regularly requesting an update to contact information for beneficiaries

When the Summary Annual Report or the Annual Funding Notice is delivered, it is a simple matter to include a reminder to verify or provide current beneficiary information to the Plan.

Auditing census information and correcting data errors

We’ve talked about the need for complete data on each participant. Asking the participants to verify their census data can prevent issues for the plan. The Plan Sponsor may find that the health and welfare benefit plans may be a more current source of information than for the qualified retirement plan.

When there is change in recordkeepers, or a merger/acquisition of the Plan Sponsor, ensuring that complete participant/beneficiary records are an integral part of the collection and transfer of records.

Transitioning to a new recordkeeper is a danger time for the retention of information. The old company may see no need for the information and the new company may not have enough information to know to request specific data before it is destroyed.

A company merger or an acquisition can cause data to be left behind. It is important that wherever the plan goes, ALL the data goes with it.


Plain language communications and offering non-English language assistance when and where appropriate.

Don’t write communications above the level of the participant’s ability to understand. Notifications and plan information are not novels. Bullet points with complete sentences may be easier for participants to understand.

When there are non-English speaking employees, providing an interpreter can go a long way to ensuring the participants know their responsibility.

Making sure the terminated participant knows why the communication is being sent to them.

Be sure the envelope does not look like junk mail. Have the plan name in the return address. If there has been a merger or a name change, be sure the return address references a name the participant will recognize.

Provide easy contact through the Plan or Plan Sponsor websites and toll-free numbers.

The easier it is for the participant to contact the Plan or the Plan Sponsor, the more likely it is that they will do so.

Ensuring the exit interview includes the importance of keeping the Plan Sponsor informed of any address changes as well as confirming the information needed to determine when benefits are due and to correctly calculate the benefits owed.

The exit interview is the last chance to emphasize the importance of keeping in contact OR to provide the distribution election package so the participant can elect to receive their distribution as soon as allowable by the plan and eliminate the need to keep in contact.

Communicating how the Plan can help eligible employees consolidate their accounts from prior employer plans and rollover IRAs.

This is tricky. There has been much controversy on providing plan participants with financial advice by plan fiduciaries. However, providing information to the participants about financial matters may be considered to be OK as long the plan fiduciaries are not benefiting from any transactions.

If there is a sale of a plan sponsor, being sure any mailing has the original plan or sponsor name for participants who terminated before the name change and that pension benefit rights are contained in the mailing.

The outside of the envelope needs to get the participant’s attention without appearing to be junk mail is very important.


Check all plan and employer records for participant, beneficiary and next of kin/emergency contact information.

Sometimes you find information in the darndest places. A company newsletter that talks about a terminated participant’s hobby may be just the tip to lead to contacting that participant.

Also, being sure no employee data is destroyed is vital. All information needed to contact the participant as well as all information that might be needed to reconstruct a terminated participant’s account must be retained by the employer and any subsequent employer sponsoring the plan.

Checking with designated plan beneficiaries and emergency contacts for updated contact information.

If the Beneficiary Designation form contains more than just the name and relationship to the participant, it can be a gold mine of information. If a participant is willing to name someone their beneficiary, chances are very good they have a relationship and are in contact.

Use free online search engines, public record databases, obituaries and social media to locate individuals.

Facebook has been instrumental in connecting high school friends after several decades. It is reasonable to use it to connect a Plan with terminated participants.

Use commercial locator services, a credit reporting agency or a proprietary internet search tool to locate individuals.

While at first glance the cost of hiring a professional to locate a participant may seem too expensive, it can save the plan a lot of money in the long run. If the plan terminates, government reporting continues until all plan assets have been distributed. Being sued by the participant’s beneficiaries can be quite expensive if they can prove the participant was denied his benefits because of lack of action by the plan sponsor.

Send correspondence to the last known address with tracking features either through the USPS or by private delivery services.

At one time, the post office would forward mail or provide the new address for a year after the change occurred. That is no longer the case.

Trying email addresses, telephone and text numbers and social media.

The exit interview is the right time to ensure you have the cell phone number as well as an email and text number.

Changing cell phone numbers stopped when it became possible for a number to go from cellular service provider to cellular service provider so many people now have cellphone numbers they have had for years.

If many years have passed, check the Social Security Death Index to see if beneficiaries should be the focus of the communications.

Seems morbid, but it may be the only trail left. The obituary will have where the participant resided and often lists their survivors.

Reach out to former colleagues of the participant or publish a list of missing participants to the employees of the plan sponsor to see if they can help locate the missing participants.

Even if the participant may have animosity toward the Plan Sponsor, they probably had reasonable relationships with their former coworkers. Publishing on the company’s intranet or in the company newsletter a list of missing former employees could be very beneficial.

Register missing participants on public and private pension registries with privacy and cyber security protections. As an example, the National Registry of Unclaimed Retirement Benefits

Repeat the steps taken over and over.

Don’t give up until all participants have been found and paid out.

Document procedures and actions.

Put the Plan’s policies and procedures to writing for clarity and consistent practices.

Government agencies are always impressed by written policies and procedures IF they are followed, and consistently applied. Such procedures should include the identity of the department or individual who performs the search for the missing participants.

Document key decisions and the steps and actions to implement the policies.

Explaining why the decisions were made and the steps to be followed were made will help any successor employees performing the search to understand the importance.

Check up on your third-party record keepers to ensure they are performing the agreed upon services and working with the record keeper to identify and correct short comings in the plan’s recordkeeping and communication practices.

Third-party recordkeepers periodically provide reports and information on the plan and its participants. It is a good practice to capture those reports and data and retain them in the Plan files instead of relying on a third party to maintain the records.

If there is a change in the third party recordkeeper or third-party administrator, the plan will have complete information and not be faced with additional charges to receive the information at a later date.

Terminated vested participants never stay where you last saw them.

They move, divorce, remarry or die and if the plan fiduciaries retain responsibilities for them until they are paid out all their benefits from the plan.

Keeping track of them until that time can be time consuming.

However, adopting a ‘the sooner they are paid the better’ policy can be most beneficial to the Plan, the other participants and the plan fiduciaries.

Helping terminated vested participants receive their benefits from the plan is a main tenet of fiduciary requirements. That can mean providing those participants with the information they need to either take their distribution or roll their vested account balance to an IRA or another qualified plan when they are on their way out the door could be the key to fulfilling that requirement.