If your company is terminating a retirement plan, you need to distribute all plan assets within 12 months. This task is straightforward for current employees, but what do you do when you can’t locate previous employees who are still entitled to benefits under the plan?
One option to ensure previous employees receive their benefits is to enlist a third party – such as an insurance company that offers annuities or a financial institution that holds retirement accounts. Alternatively, the Pension Benefit Guaranty Corporation [PBGC] has a tool that can greatly reduce the stress associated with providing benefits to prior employees – the Missing Participants Program.
What is the PBGC Missing Participants Program?
The PBGC Missing Participants Program seeks to connect people with their retirement benefits after a plan termination. For employers, the program helps ease the administrative burden of locating previous employees who have moved, changed their name, or are otherwise unable to be contacted.
The program has existed for single-employer defined benefit plans for many years but was expanded to include other types of retirement plans in 2018. Today, the program is available to employers terminating the following types of retirement plans.
- Defined contribution plans such as 401(k)s, profit sharing plans, money purchase plans, target benefit plans, employee stock ownership plans, stock bonus plans, and 403(b)(7)s.
- Small Professional Services Defined Benefit Plans that are not insured by the PBGC.
- PBGC-insured single and multi-employer defined benefit plans.
If your company retirement plan is insured by the PBGC, you are required to use the program if you terminate the plan. On the other hand, if your plan isn’t PBGC insured, the program isn’t mandatory but encouraged.
How to Use the PBGC Missing Participants Program
There are two ways you can use the Missing Participants Program. First, you can transfer money to the PBGC to cover the cost of a missing participant’s retirement benefit. In this scenario, the PBGC will provide the benefit once the participant is found. Alternatively, you can use a third party to administer the benefit and provide information about that entity to the PBGC. Then, the PBGC will share that information with the participant once they are found.
Each type of plan has different requirements, instructions, and required paperwork. Use the following links to find the forms and instructions for your plan type.
- PBGC-insured Single-Employer Plans.
- Defined Contribution Plans.
- Small Professional Service Defined Benefit Plans.
- PBGC-Insured Multiemployer Plans.
How Participants Can Use the Program
If your current employees need to find lost benefits from a previous job or your former employees reach out to you once you’ve transferred funds to the PBGC, direct them to the Missing Participant Search Tool. This is the database that participants can search to find retirement plans where they are listed as a missing participant.
To search the database, participants will enter their last name and the last 4 digits of their Social Security number. If a match is found, the tool will let them know how to receive their benefits.
Terminating a retirement plan is a massive undertaking, especially when you have missing participants you need to locate. If you could use a hand, an experienced plan advisor can help reduce the stress of this situation and keep you on track to meet your responsibilities to current and former employees.
Meld Financial Has the Answers to Your Retirement Plan Questions
At Meld Financial, we have been helping employers effectively manage their retirement plans for forty years. Throughout this time, we have helped numerous businesses terminate retirement plans and navigate the challenges of locating missing participants.
The Meld team acts as a quarterback for your retirement plan to help you choose investments, manage deadlines, promote positive relationships with custodians, and support you as you terminate a plan. Our vast experience gives us the first-hand knowledge to answer your most pressing retirement plan questions.
Reach out to a member of our team today to discuss your specific situation and how we can help you effectively manage your retirement plan.