Finding Lost Participants

The more time that passes after an employee terminates employment, the more difficult it may be to find them.  Finding lost participants becomes even more critical in the event that the company’s retirement Plan is being terminated due to merger or acquisition or dissolution of the company.  This article focuses on distribution processing, the required and optional methods for finding lost participants, and a checklist for Plan Sponsors to use to help minimize the impact of lost participants on their plans.finding lost participants


Your Plan document will spell out the rules for processing distributions from your Plan, but in general most 401(k) and profit sharing plans may allow for the following:

  • $1,000 or less.  Distributions of less than $1,000 can be processed even without the consent of the Plan participant.  This is sometimes called a cash out distribution
  • $1,001-$5,000.  For balances under $5,000 the Plan can transfer the funds to an IRA established for the Plan participant.  This is sometimes called an automatic rollover distribution.
  • $5,001 or more.  If the participant’s balance in the Plan is more than $5,000, then the benefits cannot be distributed without the consent of the participant. 

We recommend that every participant be given the opportunity to make an election about how to receive his or her benefit from the Plan.  The Plan sponsor should continue to follow up to insure that the former employees are paid as soon as possible following termination of employment.


Lost participants cause a host of challenges for the Plan sponsor including expense, and fiduciary responsibility.  The following steps must be taken and documented to find a lost participant before further action to dispense with the participant’s account balance is allowed:

1. Mail.  Send the distribution election forms and/or a letter to the participant at their last known address.

a. If the letter is returned, keep the envelope as evidence that the mailing was attempted.

b. If the letter was delivered, but no response is received, send a second letter via Certified mail.  If the return receipt is returned, then the address is likely valid.

2. Company records.

a. Write or call anyone listed as an emergency contact.

b. Check beneficiary designations for relatives who may be able to help.

c. Check with other benefits providers to see if they have a different address on file.

d. Ask the people that worked closely with the employee to see if anyone has kept in touch.

3. Social Security Administration letter-forwarding service.  SSA will forward your letter to a lost participant who is due a “sizeable amount” of money.  For a non-refundable fee of $35 they will try to forward your letter to the participant.  They will not, however, confirm delivery, nor will they divulge any information about the whereabouts of the person.  The process can take up to six months.  Go to for more information.


There are certainly other methods that you may wish to employ to find a lost participant.  We do not endorse any one of these options over the other, and prices are subject to change.  Some options include:

1. Internet search

a. Google

b. Social media (Facebook, Twitter, LinkedIn, etc.)

2. Commercial locator services

a.  $1.95 per search

b.  $2.00 for an unconfirmed search, $15.00 for a confirmed search

c.  $22.86 per month; unlimited reports

PLAN TERMINATIONNew Call-to-action

A retirement plan cannot be terminated until all benefits are paid to all participants.  Lost participants can delay the Plan termination process significantly.  These tools become of critical importance in the event that a company needs to or wants to terminate their plan.  It can be very frustrating for all involved to have to go to these time-consuming steps to find a lost participant.  Click here to learn more about the Plan Termination process.


If you are a Plan sponsor, or responsible for your company’s Plan, you might run through this checklist to minimize the risk of having lost participants:

  • Include instructions in your employee termination package for requesting a distribution from your retirement Plan
  • Follow up in 90-days to see if a distribution has been requested or processed
  • Instruct your Plan provider to cash out small balances if your Plan document allows
  • Ask your Plan provider about an Automatic Rollover option
  • Review the report that shows each participant’s account balances in the Plan
  • Ask your Plan’s investment advisor to reach out to terminated employees to assist them in transferring their balance to an IRA


Most of our clients are small businesses.  A couple of things are always important when it comes to their Retirement Plan – they want simplicity, and they want to keep costs low.  To help them in both of these efforts, we include in our annual Plan administration service assistance in paying out benefits to terminated employees.  By keeping only active employees in the plan they keep costs down.  By paying out terminated employees now, instead of trying to locate a lost participant later, they simplify the administration of the Plan.  Click here to request a proposal from Benefit Resources, and learn about how we can help you with your Plan today.


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