If you are looking for your 401(k) check, this may actually be true. The Pension Benefit Guaranty Corporation, a federal agency, has long had a “missing participant program” which helps find pension plan participants who may have left their employers years earlier and are now owed pension benefits, but cannot be found. The program currently covers only terminated single-employer defined benefit (DB) pension plans (plans that pay benefits based on a formula defined in the plan and in the form of an annuity). The program does not cover defined contribution (DC) plans (plans that pay only the participant’s account balance, e.g., a 401(k) plan).
Although workers in DC plans typically take their account balances with them when they separate from employment with the sponsoring employer, as many as 30% of departing workers in 401(k) plans leave their money in the plan. Many of these individuals never seek to claim their 401(k) money. However, tax law requires pension plans to distribute pension benefits to vested participants if the plan is terminated and, in any event, by April 1 of the year following the year the participant turns age 70 ½ or the year they retire, whichever is later. If a 401(k) plan cannot locate the participant, it is in a bit of a pickle as the PBGC’s missing participant program currently covers only DB plans. This may be about to change soon.
In September of 2016, the PBGC issued a proposed rule that would include terminated DC plans in its missing participant program. Like terminated single-employer DB plans, terminated DC plans would be able to transfer funds to the PBGC for payment of benefits to missing participants once they were found. Another important part of the expanded program would be a new unified database that would include information about missing participants and their benefits and a directory by which members of the public could easily search the database to determine whether it contained information about benefits being held for them. No word yet as to when the proposed rule will become final.
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