With the release of Vanguard’s September 2024 study (Job transitions slow retirement savings), we can consider adding a new term – shrinkage – to the lexicon of retirement savings ills associated with America’s mobile workforce, taking its spot alongside its sibling, cashout leakage.

When it comes to locating missing plan participants, electronic searches or “e-searches” are an indispensable tool. While it’s been proven that e-searches can be highly effective, inevitably situations will arise where plan sponsors must do something more, and that typically involves performing a more intensive search, where additional search resources are applied to improve the quality of the search, over and above what an e-Search can deliver.

No retirement plan sponsor likes the idea of dealing with uncashed distribution checks, nor do they wish to draw unwanted regulatory attention or to become embroiled in costly litigation because of their uncashed check policies.

Unfortunately, many plan sponsors place themselves in precisely that spot, becoming unnecessarily over-burdened with unresolved uncashed checks, while inviting unwanted regulatory scrutiny and/or legal challenges by embracing flawed uncashed check policies.

A more-enlightened approach to managing the problem of uncashed checks seeks to minimize their numbers, while simultaneously steering clear of the “red flags” that could land them in hot water.

In horror movies, embattled humans facing a zombie apocalypse eventually realize that no one is coming to save them and must take decisive action to save themselves from oblivion.

There’s a lesson here for plan sponsors who must confront the problem of locating missing participants.

In the near-term, there’s likely nothing that will spare plan sponsors from addressing the missing participant problem head-on. In the face of uncertainty, they must take decisive action to avoid being overwhelmed, including implementing effective, common-sense search practices, and pairing those search practices with other actions that will minimize the incidence of missing participants over time.

If a tree falls in the forest, does it make a sound? Opinions are split on this weighty philosophical matter, but a more-definitive answer to another question may surprise you.

If a search for a missing participant is not properly documented, is it a diligent search? To regulatory authorities who may scrutinize a plan sponsor’s search efforts, the answer is decidedly “no.” For a regulator to consider a search to be diligent, it must be well-documented, and to do otherwise can result in audits, penalties and increased fiduciary risk.

Determining retirement plan participants’ life status is an important, albeit uncomfortable task for plan sponsors. Whereas plan participants are typically more concerned about securing a comfortable retirement income that lasts for life, plan sponsors must deal with deceased participants who will leave behind residual plan benefits requiring proper administration.

In the retirement community, momentum is growing to make our 401(k) system more inclusive and to ensure that retirement savings are more equitable.

I'm a big fan of 401(k) plan consultants, who’ve been forceful advocates for the adoption of best practices at leading retirement plan sponsors. So, it’s surprising to me that, when it comes to automatic rollover programs, consultants sometimes miss the mark, at least in terms of participant outcomes.

August 14^th is National Financial Awareness Day, and 401(k) plan sponsors have been instrumental in increasing the financial awareness of millions of Americans by providing them with access to workplace retirement savings plans that materially enhance their prospects for a timely and comfortable retirement.

Winston Churchill, once referring to the intentions of the former Soviet Union, stated: “it is a riddle, wrapped in a mystery, inside an enigma.” For 401(k) plan sponsors, that’s an apt description for the problem of missing participants.