It has long been a challenge for employers to keep track of employees once they are no longer on the payroll. People relocate, marry, divorce, change their names and ultimately pass on. Couple that with the mobility of the 21st Century workforce and the increased use of auto-enrollment programs, and employers find themselves with an ever-increasing population of missing or unresponsive former employees; many of whom are not even aware that they have a balance in their former employer's retirement plan.  These missing former employees are considered plan participants under the law, posing a serious challenge for employers.

The DOL and missing participants

The Department of Labor  estimates that tens of thousands of participants lose track of an estimated $850 million in 401(k), 403(b), 457 and other defined contribution assets each year.  These missing former employees are still considered plan participants under the law. The Internal Revenue Service (IRS), DOL, and the Pension Benefit Guaranty Corporation (PBGC) have made it clear that it is the employer's responsibility to find these former employees.  These agencies have emphasized the importance of employers maintaining and documenting a prudent process to verify the efforts made to find missing or unresponsive former employees with an account balance in the plan.

Further, the DOL has stated that by not maintaining and documenting their process, a plan sponsor could be deemed to have breached their fiduciary duty under the plan.