As the Labor Department cracks down on plan sponsors for perceived lapses in locating missing participants, plan sponsors have taken notice. While they want to do the right thing, sponsors complain that without guidance they don't know how far they need to go to keep track of their participants.
Sponsors, for example, would like more clarity when it comes to costs. It is unclear how much plan sponsors should spend to obtain updated addresses of missing participants as sponsors are permitted to pay only reasonable plan administration expenses. Searching for participants with unclaimed accounts can cost anywhere from $1.25 to $40 per search depending on the type of service provider, according to the Government Accountability Office.
Whether and when to charge the plan or missing participants for the searches is another open question. Whatever sponsors decide, they need to consider account size. A sponsor may want to hire a locator service, which is pricey, for a $600,000 account but probably not for a $6,000 account, said Bradford Campbell, a partner with law firm Drinker Biddle & Reath LLP in Washington.
"One of the questions is at what point is it too much time and effort and trouble to try and find somebody that the plan is paying for," he said.