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If it hasn’t happened to you already, you may have a future encounter with not being able to locate a former ESOP participant with a vested account balance.  This can especially occur when there is a delay in paying the distributions to the ESOP participants due to participants moving to a new address and not providing notice to the Plan Administrator.  When this happens, there are a couple of steps you should follow.

ESOP Plan Document Guidance

The first thing to look at is your ESOP plan document.  The document should have a section that discusses missing or lost participants.  If you do not see a provision in your plan document, check with your ESOP TPA or ERISA attorney to see if they can assist you.

DOL Guidance

The Department of Labor issued Field Assistance Bulletin (FAB) 2004-02 - Fiduciary Duties and Missing Participants in Terminated Defined Contribution Plan.  The bulletin states a plan fiduciary cannot distribute a missing participant’s benefits in the case of a terminated plan until it has tried using each of these methods to locate the missing participant:

  1. Send a letter to the last known address via certified mail.

  2. Check related plan records to see if more up-to-date information with respect to a given participant or beneficiary exits in another plan.

  3. Check with the designated plan beneficiary concerning the location of the missing participant.

  4. Use the Social Security Administration (SSA) letter-forwarding service.   The IRS has a similar letter-forwarding service, but recently eliminated the use of it for this purpose with the release of Revenue Procedure 2012-35, effective August 31, 2012.

Other Search Options

The FAB also suggests using the following tools to locate a missing participant in addition to the four methods above:

  1. Internet search tools

  2. Commercial locator services

  3. Credit reporting agencies

For more ESOP administration tips, please check out our FREE administration eBook!

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