Lost participants in 401k/pension plans

1) I had this discussion with our plan design firm a few years ago. Their position was that the state unclaimed property fund was NEVER an appropriate place to go. 2) The IRS has a locater service which is supposed to allow you to submit name and ID information which they then trace. If they find a match, they give the participant information to allow them to contact you. 3) One suggestion the design people had, which we used once, was to have the Plan purchase a money order. Mail the money order to the last known address. Plan no longer cares what happens. Money is out of the Plan. If envelope returned, keep it, unopened. If not returned, fine.

-- Bruce Davidson Cantor, CPA, JD Admitted in Colorado

Cathy wrote:

Only thing I can find. Hope it helps Milt Baker CPA ___________

Can't Find A Plan Participant?

Many employers discover that finding missing participants can be next to impossible. However, plan sponsors are required to take all reasonable means to locate a participant. One option available to a sponsor is the IRS's Letter Forwarding Program. IRS Policy Statement P-1-187 provides information on the use of the letter-forwarding program. The program is available to individuals, companies and federal agencies that are trying to locate missing individuals. It may be especially useful to plan sponsors or administrators who are attempting to locate missing participants. Requests Involving Fewer Than 50 Missing Participants The IRS's Disclosure Office can forward letters from plan administrators to missing individuals if the administrator provides the following information: STEP ONE: Prepare a cover letter directed to the IRS Disclosure Officefor the local area where the requester is located. This cover letter should: state why the IRS' assistance is being sought, list the name(s), social security number(s),* and (if available) last known address(es) of the individual(s) who cannot be located, include the name and address of the person or organization to whom the IRS should send an acknowledgement letter (limited only to acknowledgement of receipt of the sender's correspondence and an indication of whether or not the matter has been accepted into the letter forwarding program).

• The correct social security number (SSN) for a missing individual is mandatory; The IRS will not attempt to locate an individual without this information. When a SSN is furnished, we will search our records to determined if we have an address. STEP TWO: With your cover letter, include a letter (three pages or less) directed to the individual(s) who cannot be located. This letter should: advise the recipient of the reason for the letter, include instructions as to what the recipient should do to contact the sender, if he or she decides to respond, make clear that response to the sender's letter is completely voluntary on the part of the recipient, and include the following disclaimer statement, "In accordance with current policy, the IRS has agreed to forward this letter because we do not have your current address. The IRS has not disclosed your address or any other tax information and has no involvement in the matter aside from forwarding this letter. Your response to this letter is completely voluntary." Upon receipt of a valid request, the IRS Disclosure Office will search its records under the social security number provided and, if an address is found, forward the letter using an IRS envelope. If an address cannot be found or the letter is returned by the Postal Service as undeliverable, the letter will be destroyed. The requester will not be notified of this action. The law does not allow the IRS to provide the sender of such letter with the results of its efforts. For requests involving less than 50 recipients there is no charge. Each request should be sent to the attention of the Disclosure Officer at the IRS's district office nearest the requester (It does not matter where the recipient last resided.). To find the office nearest you, click here. Requests Involving 50 or More Missing Participants Requests involving 50 or more potential recipients, including multiple requests from a single entity that can be expected to total at least 50 recipients, are processed separately from the free program. There is a charge for this service. Customers who want to use this program should call the Disclosure Office in Washington, DC at 202.622.3324 for additional information or click here. The mailing address for this service is: Internal Revenue IRS Director, Office of Governmental Liaison & Disclosure CL:GLD, Room 1603 ATTN: Disclosure Officer

1111 Constitution Ave., NW Washington, DC 20224 How quickly they are able to response to your request is based on overall workload of the Disclosure Officer. Another Option Another option is The National Registry. This is a website where plan sponsors, plan administrator, custodians, or other plan service providers can register the names of missing plan participants who have unclaimed retirement funds. Individuals who think they may have old 401k accounts simply enter their social security number and the database is searched for any nationwide matches. If there are any matches, the person shown who the employer(s) is that has retirement money and is also asked to provide your current contact information so that this employer may contact them and make arrangements for distribution. You can find out more at

"Cathy" wrote

Good Lord. Why?

You should probably double check wiht the UP division for the state, becfause you seem to have received bad information.

"551(14) property in an individual retirement account, definedbenefit plan or other account or plan that is qualified fortax deferral under the income tax laws of the United States,three years after the earliest of the date of thedistribution or attempted distribution of the property, thedate of the required distribution as stated in the plan ortrust agreement governing the plan, or the date, ifdeterminable by the holder, specified in the income tax lawsof the United States by which distribution of the propertymust begin in order to avoid a tax penalty; So it seems you have to close the plan per the plan documents and/or the federal laws that apply, send the check to the last known address of record, issue all 1099-R's (probalby do backup withholding to boot), if the IRS notice of deficiency to the recipient doesn't get them to contact you......then it seems that three years later you can send it to the state. Be real sure to run all this by your tax accountant (CPA or EA) and/or attorney to make this water-tight.

And yes, after you do all of the above "distribution" efforts you may want to then shift those funds to a separate account, and the attorney can tell you if it needs to be interest bearing or not. Then three years out you can send it to the state.

-- Paul A. Thomas, CPA Athens, Georgia

Cathy, you likely don't need to go through the hassle of finding them. A plan can be structured to allow an automatic distribution for any participant that has less the $5000 (if they are no longer employed at the company). I have also seen plans that send a letter to the participant's last known address that states "if you do not respond to this letter, your 401k account will automatically rolled over to an IRA at XYZ brokerage company". They don't lose their money, but the 401k plan doesn't have to hold onto it anymore either. If a former participant calls you 5 years from now and ask about their money, you simply explain it was rolled over to XZY and they would be happy to help him/her.

Before you use a locator service (including the IRS's), since you have their SSN's, check with the "Social Security Death Index" on any genealogy web site to see whether they're listed (and therefore deceased). Access is generally free.

Followup to my post on this subject "Find a Participant" The following is URLs for items referencd to in the article:

IRS Letter Fowarding Program - Contacting Missing Participants or Beneficiaries:

0106,00.html IRS Policy Statement P-1-187: 0108,00.html IRS Disclosure Office: 3736,00.html Milt Baker CPA

Beneficiaries:

0106,00.html>

P-1-187:

0108,00.html>

Corrected URL

IRS Disclosure Office:

3736,00.html Milt Baker CPA

Beneficiaries:

0106,00.html>>

P-1-187:

0108,00.html>>

I have had good luck with a site called findmissingpeople.com They charge $19.95 with a no find no fee policy.