How Can A Plan Distribute Notices to Missing Participants?

by: Frank J. Bitzer and Nicholas W. Ferrigno

The Department of Labor (DOL) has advised that plan administrators must attempt to locate missing participants to satisfy their fiduciary obligations. DOL Adv. Op. 11-86. Where a plan administrator, after a diligent good faith effort, is having difficulty locating missing plan participants, he may seek the assistance of the Internal Revenue Service (IRS). The IRS will forward correspondence of a “humane nature” to taxpayers who have proven difficult to locate. The IRS considers information regarding participant retirement benefits to be of a humane nature. Rev. Proc. 94-22, 1994-1 CB 608.

To seek the assistance of the IRS through their letter forwarding program, the plan administrator must forward a written request to the IRS that briefly explains the need for assistance in forwarding the letter. The request must provide the participant's Social Security Number and identify the letter to be forwarded.

The IRS will make an attempt to forward the plan administrator’s letter to the participant's last known address in its files. They will not, however, make any attempt to verify that the letter was successfully delivered. They also will not provide the plan administrator with any information they have on file regarding the missing participant. The request for assistance in locating fewer than 50 missing participants should be forwarded to the Disclosure Officer at the IRS district office which services the plan.

The IRS will not charge a fee for the letter forwarding assistance for less than 50 participants. Where the plan administrator is attempting to locate 50 or more missing participants a request must be made through IRS Project 753, Computerized Mailout Program. Under this program, the plan administrator must submit a request that:

• Briefly explains the need for forwarding the letters
• Contains the approximate number of recipients the plan is trying to locate
• Contains a statement that the plan administrator has a social security number for each missing participant (provided on magnetic tape) and that the administrator is aware that a fee will be charged for the service
• Provides one copy of the letter to be forwarded

The letter must contain a required disclosure, situated in a conspicuous place, that advises the participant of the IRS’ limited role in forwarding the letter. Requests to locate 50 or more missing participants must be submitted to:

IRS Director of the Office of Disclosure,CP:EX:D
Room 1603, 1111 Constitution Avenue, NW
Washington, D.C. 20224

Under IRS Project 753, the plan administrator is required to submit a flat fee of $1,750 per request, along with $.50 for each letter to be forwarded and $.01 per address search. Rev. Proc. 94-22, 1994-1 CB 608.

For defined benefit plans subject to Pension Benefit Guarantee Corporation (PBGC) coverage that are terminating, the PBGC advises that the plan must purchase an irrevocable commitment from an insurance company for the provision of benefits to any missing participant who is entitled to $5,000 or more in benefits. Missing participants who were married as of their separation from service must have a joint and survivor annuity purchased on their behalf. PBGC Adv. Op. 91-8.

Article Reprinted from Erisa Facts 1999 by Frank J. Bitzer and Nicholas W. Ferrigno.