Locating 300+ Lost Pension Participants and Eliminating RMD Violations

The company sought a new pension plan administrator who would make locating the lost participants a priority while still delivering exceptional service to its active pensioners. Strategic Benefits Advisors (SBA) was chosen based on its proven track record of success in pension administration and actuarial work.

SBA immediately began outreach to affected participants by registered mail — but unlike most administrators, SBA did not stop there. SBA not only performed a daily review of death audit reports, it also scoured local obituaries, white page listings, and other search engines for participant and spouse information and followed up with phone calls and manual death certificate requests through state agencies to identify surviving spouses. SBA also made recommendations to the client resulting in plan amendments allowing for small-sum (total benefits between $1,000 and $5,000) automatic rollovers into IRA’s and an RMD default election to alleviate any missed RMD commencements when participants were definitively found but non-responsive. These out-of-the-box initiatives were key components in the successful commencement of participants.

While SBA and the plan sponsor’s primary goal was to pay out every benefit, for those situations where the participant could not be found, SBA, in concert with ERISA counsel, additionally made recommendations resulting in administrative process changes. This included creation of a process whereby individuals’ unclaimed benefits could be forfeited before reaching RMD age following a well-documented and diligent search effort.

Over the course of one year, SBA located the majority of the backlog population and commenced their benefits, including the successful cash out or rollover of 100% of small-sum participants. Every pension plan participant who was past RMD age, living or deceased, was ultimately put into payment or forfeited. SBA also greatly reduced the number of participants over age 65 but below RMD age who hadn’t commenced benefits and continues to shrink this population with regular communication and continued application of elbow grease in the data cleanup process.

Since the completion of this work and amendment of its plans, the company has had zero missed RMDs, effectively eliminating its audit risk related to RMD violations. Shortly after the work was completed, one of the frozen plans was audited by the IRS. The client stated that without SBA’s help, the results of the audit could have been disastrous; instead, violations were minimal.