(b)lines Ask the Experts – Locating Beneficiaries

May 14, 2013 (PLANSPONSOR (b)lines) – “Must we make every effort to locate the beneficiary of a deceased participant so that the account is properly transferred/distributed to him/her?
By PS

“I read with great interest your Ask the Expert Q&A from a few months ago regarding efforts that should be made to locate participants (see “Ask the Experts: Forfeiting Missing Participant Balances”), but are plan sponsors obligated to locate beneficiaries as well? On occasion, when participants die, there is either a) no address listed for the named beneficiary or b) the address was the beneficiaries address from several years ago, which is now out of date.”  

Michael A. Webb, Vice President, Retirement Plan Services, Cammack LaRhette Consulting, answers:  

Excellent question! Though, as the Ask the Expert column that you cite indicates, Department of Labor Field Assistance Bulletin (FAB) 2004-02 only addresses locating participants and beneficiaries in the context of plan termination, I think we can safely assume it is best practice to make similar attempts to locate beneficiaries upon the death of a participant, presuming the beneficiary does not come forward to request his/her benefit, as is often the case with death claims. In fact, a recent ERISA Advisory Council report views this as a “no-brainer” issue:  

“There appears to be minimal concern over the issue of locating beneficiaries. A number of witnesses indicated that when participants provide complete beneficiary designation information, especially including the Social Security numbers of the beneficiaries, it simplified locating the beneficiaries, even if the addresses on the designation were dated. 

“The person advising the plan or its service provider of the participant’s death is usually in a position to identify the beneficiaries and provide contact information…….The Council heard testimony to the same effect that where a beneficiary is missing, standard locator services are available. These are generally the same services used to locate missing participants. The Council does not believe there are any special problems to address in this area.”  

Thus, though not explicitly stated, the Experts presume it would be best practice to attempt to track down the beneficiary by all reasonable means whenever there is factual knowledge of the participant’s death. It is further stated that it should not be difficult to locate a beneficiary for whom an SSN has been provided. Most likely, the plan’s recordkeeper can easily locate the beneficiary via commercial locator services available to it.  

Thank you for your question!   

If you would like to receive an answer to your Ask the Experts question in person, be certain not to miss the upcoming 2013 PLANSPONSOR National Conference June 4-6 in Chicago, as the Experts will be on hand to address your questions face-to-face in their third annual breakout session. Don’t miss your opportunity to “grill” the Experts on the issues that are most important to you.  

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. 

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