Consolidation Corner

The Fundamentals of Locating Missing Participants

Posted by Thomas Hawkins on Mar 8, 2017 10:41:38 AM

This video presentation is designed to give the viewer a basic understanding of the principles of locating missing participants in 401(k) plans.


The video addresses the following key questions that plan sponsors have regarding the issue of locating missing participants:

  • What is a missing participant?
  • What causes missing participants?
  • Why is it important to locate missing participants?
  • What are the best practices for locating missing participants?
  • What should I look for in a missing participant locator service?


Read More

Topics: Missing Participants, Lost Participants

The ABCs of Missing Participants

Posted by Thomas Hawkins on Aug 25, 2016 8:30:00 AM



What is a Missing Participant? 

  • A missing participant is a qualified plan participant who cannot be located by the plan for the purposes of executing transactions (ex. - required minimum distributions, distribution checks, etc.) or for whom mailings are consistently returned due to an incorrect address.
  • It’s estimated that anywhere from 3%-6% of qualified plan participants are consider "missing" and requiring location.Missing participants can cause administrative burdens, increased plan costs and elevated fiduciary risk (ex. - missed mailings and uncashed distribution checks).  
Read More

Topics: Missing Participants, Lost Participants, What is a Missing Participant?

New Penalties for Lost Participants Take Effect

Posted by Neal Ringquist on Aug 23, 2016 8:30:00 AM


In November of 2015, Congress enacted the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act to apply inflation adjustments to various penalties defined under the Federal Civil Inflation Adjustment Act of 1990. One of those penalties was the $10 per employee penalty for failure to furnish reports to certain former participants and beneficiaries or maintain records. The new penalty, as published in the Federal Register (Table C), is now $28 per employee, effective August 1, 2016.

With the growth of auto enrollment in the 10 years since the passage of the Pension Protection Act, combined with the increase in workforce mobility over that time (the “gig” economy), employers are struggling to maintain current addresses for former participants. In October of 2013, the ERISA Advisory Council held a session to establish best practices for finding missing participants – a summary of the findings can be found here, and is an excellent resource for best practices and legal guidance. As a recognized thought leader in the area of lost participant search, Retirement Clearinghouse was asked to submit testimony.


Read More

Topics: Missing Participants, Lost Participants

One Solution to Three Costly Retirement-Saving Mistakes

Posted by Neal Ringquist on Sep 2, 2015 4:37:00 PM


In his September 2nd, 2015 MarketWatch article One Solution to Three Costly Retirement-Saving Mistakes, RCH’s CEO Spencer Williams provides insight as to why a majority of Americans are not very confident in their retirement readiness. Three costly mistakes consistently plague retirement savers:  1) leaving 401(k) accounts behind when changing jobs, 2) prematurely cashing out and 3) not informing prior employers’ retirement plan record-keepers about address changes.


While these common mistakes can be costly, Williams identifies a simple way to avoid them – by consolidating your retirement savings when you change jobs.  


Finally, Williams offers practical advice on how retirement savers can get the consolidation process started.


Click Here to Read the MarketWatch article, One Solution to Three Costly Retirement-Saving Mistakes.

Read More

Topics: Auto Portability, Mandatory Distributions, MarketWatch, Safe Harbor IRA, Automatic Rollovers, Missing Participants, Common Mistakes

Reducing the Burden of Missing Participants

Posted by Michael Wilder on Aug 19, 2015 9:26:00 AM

Whenever I am meeting with a plan sponsor, TPA or recordkeeper for the first time, I ask about returned mail related to missing participants; and almost every time I get…“the look”. The look and/or eye roll that instantly says that returned mail is definitely a problem. The entire retirement industry is all-too-familiar with returned mail related to missing participants. In addition to the money wasted on materials and mailing costs, missing participants create administrative burdens and increase the plan’s fiduciary liability risk.  So, what’s a fiduciary to do?


Be proactive

Issue reminders to participants asking them to review and/or update their address on file. According to the US Census Bureau, 12% of Americans moved each year from 2008-2014; and let’s be honest, the retirement plan provider is usually way at the bottom of the priority list regarding an address change notification. Some ways to be proactive include:


Read More

Topics: Safe Harbor IRA, Automatic Rollovers, Missing Participants, Lost Participants

Automatically Moving Mandatory Distributions Forward

Posted by Neal Ringquist on Aug 11, 2015 4:01:11 PM


The Case for Automatically Moving Mandatory Distributions Forward

The mandatory distribution-to-Safe Harbor IRA plan feature as commonly utilized today was conceived in 2001 and launched in 2005 with good intentions, and for valid reasons. A mobile workforce, combined with a lack of retirement savings portability, had created a burgeoning problem for plan sponsors: an explosion of small-balance (less than $5,000) accounts left “stranded” in-plan, resulting in rampant cashouts, missing participants, uncashed distribution checks and the like. These problems only accelerated with the widespread adoption of auto enrollment, beginning in 2009.  


While automatic rollover programs provided a measure of relief to the problems faced by plan sponsors, they inadvertently consigned their former plan participants to Safe Harbor IRA “landfills” – where cashouts continue and account fees erode their balances.


Fortunately, there’s a more-responsible answer: to systemically “recycle” these Safe Harbor IRA balances back into the defined contribution system.


First, Some History and Simple Math


In 2001, when Congress passed The Economic Growth and Tax Relief Reconciliation Act (EGTRRA), it gave birth to the Safe Harbor IRA by amending the Internal Revenue Code to add a requirement that mandatory distributions in excess of $1,000 must be paid in a direct rollover to an IRA. At this time, T-Bill rates were over 6%. In March 2006, when the Department of Labor issued safe harbor regulations launching the automatic rollover, T-Bill rates were 2.6%. Today, T-Bill rates are .075%. This is material because the IRA agreement the plan fiduciary must enter into as per the regulations must provide that the investments “will be those designed to minimize risk, preserve principal while providing a reasonable rate of return, and maintain liquidity, such as money market funds, interest-bearing savings accounts, certificates of deposit and fully benefit-responsive stable value funds.”  


Read More

Topics: Auto Portability, Mandatory Distributions, Safe Harbor IRA, Automatic Rollovers, Missing Participants, Lost Participants

Pitfalls Associated With Lost & Missing Participants

Posted by Neal Ringquist on Jul 10, 2015 12:54:00 PM

"Do You Feel Lucky 401(k) Saver? Do You?"

Collaborating with Retirement Clearinghouse, Boston Research Technologies completed groundbreaking research earlier this year on the mobile workforce and the job changer’s attitudes and behavior regarding their 401(k) accounts during job transition. When asked what these participants did with their prior employer 401(k) accounts, the majority of respondents indicated they left their balances behind with 53% of Millennials, the most mobile age cohort, indicating they had left at least one retirement account with their prior employer.

Leaving retirement accounts with a prior employer can lead to bad outcomes. While the move may be a smart one for participants leaving a large company with a well-structured plan and low cost investment alternatives, even good intentions can lead to bad outcomes if the participant doesn’t keep their prior employers up-to-date on their address changes. Retirement Clearinghouse CEO Spencer Williams, a regular contributor to MarketWatch as a MarketWatch Retirementor retirement advice expert, published an excellent blog post this month outlining some of the pitfalls associated with lost and missing participants titled, 'Do You Feel Lucky, 401(k) Saver? Well, Do You?" For Clint Eastwood Dirty Harry fans, the article will make your day.

 Click Here To The Full Article

Read More

Topics: MarketWatch, Missing Participants, Lost Participants

Click Here To View RCH's Upcoming Events!

Consolidation Corner

Don't get left behind!!

Be sure to sign up to receive our emails keeping you up to date on all of the latest industry news, events and articles featuring Retirement Clearinghouse!

Click Here To Download  BRT's Executive Summary  on the Mobile Workforce

Subscribe to Email Updates