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  70 West Madison St.
  Suite 1500
  Chicago, Illinois 60602
  (312) 696-1373 





Itís a familiar story: you or your retirement planís third party administrator (TPA) need to make a benefit distribution to an ex-employee. But the employerís records are out of date and the former employee cannot be located. Worse yet, the missing participant has attained age 70Ĺ so the plan is required to make minimum distributions (RMDs) but cannot do so.

Can you sit back and wait for the missing ex-employee to come forward and claim their benefits? If they never show up, can you forfeit their benefits?

The U.S. Department of Labor (DOL) is reported to be targeting retirement plans with missing participants for audit. By examining Form 5500 annual reports, the DOL discovered that some plans were reporting a larger number of terminated vested participants who were not receiving benefits. Worse yet, the DOL was able to contact a significant number of these ďmissingĒ participants by simply sending a certified letter to their last known address. As a result, the DOL has reportedly initiated a national audit campaign targeting plans with missing participants with a view towards treating lackadaisical efforts to locate them as a breach of fiduciary duty. And, the IRS can weigh in with additional penalties for failure to make RMDs to those ex-employees who have attained age 70Ĺ. 

What to do? Well, the IRS has recently provided a get out of jail card that works if you follow the mandated procedure for finding missing participants. So, what is the secret sauce?

If the plan has taken all of the following steps, the IRS will not challenge your plan for failure to make RMDs:

  • Searched plan and related plan, sponsor, and publicly-available records or directories for alternative contact information 

Used any of the search methods below:

  • A commercial locator service;
  • A credit reporting agency; or
  • A proprietary internet search tool for locating individuals; and
  • Attempted contact via United States Postal Service certified mail to the last known mailing address and through appropriate means for any address or contact information (including email addresses and telephone numbers)

Also bear in mind that the DOL expects employers to be proactive and take steps to locate missing participants before their benefit start dates.


You or your planís TPA need to take appropriate steps to locate missing participants before their plan benefits are payable. This is likely to be successful with a significant number of ex-employees. However, for those who stay missing, you will want to follow the IRS drill set out above before those participants reach age 70Ĺ.


Andrew S. Williams
Golan Christie Taglia LLP
70 West Madison St.
Suite 1500
Chicago, Illinois 60602
(312) 696-1373


Copyright © 2017 Andrew S. Williams. All rights reserved.