The IRS and the Social Security Administration used to have letter forwarding services you could use to find employees who terminated with unclaimed wages or money in their 401(k) or other retirement accounts. Bowing to new technologies, both agencies discontinued their services.
The Department of Labor (DOL) has now specified the reasonable steps you must take to find missing 401(k) plan participants. Good news: You can piggyback on these steps to find employees who are owed final wages or other payments. (Field Assistance Bulletin No. 2014-01)
Steps that must always be taken. These steps involve so little cost and have such a high potential for success that 401(k) plan fiduciaries should always take them:
- Use certified mail
- Check a related plan (e.g., a group health plan) and employer records. If privacy is a concern, request that the record’s custodian send the missing employee a letter
- Check with a designated plan beneficiary
- Use free electronic search tools, such as Internet search engines, public record databases covering licenses, mortgages and real estate taxes, obituaries and social media.
Additional steps that may need to be taken. Depending on the amount in employees’ 401(k) accounts, and the cost involved, the DOL advises that possible additional search steps may need to be taken. These additional steps include using fee-based Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases and similar services.
You can charge missing employees’ 401(k) accounts a reasonable fee for efforts to locate them. Caveat: Your method of allocating fees must be consistent with the plan’s terms and your fiduciary responsibilities.