Addressing the challenge of lost participants in retirement plans has become increasingly prevalent in recent years. Despite efforts to address the issue of unclaimed retirement benefits through legislation like SECURE 2.0, the challenge remains significant. SECURE 2.0 legislation seeks to address this issue by mandating the establishment of a Retirement Savings Lost and Found database by the end of the 2024 plan year, aiming to assist in locating missing retirement plan participants and connecting them with their unclaimed benefits. However, the effectiveness of this initiative may be hindered by the fact that it only allows plan participants to search for contact information of their former employers, not vice versa. We ask then, how likely is it that individuals owed benefits will initiate a search if they are unaware of their entitlement?
Plan Sponsors have a duty to provide important notifications regarding the plan and any changes impacting retirement accounts to all plan participants, whether actively employed, or former employees with a balance. Maintaining records for former employees can be a tedious, costly and time-consuming task. Considering these challenges, the responsibility falls upon employers, their providers, and often, their financial professionals to step in and assist. By working with the plan’s service providers and financial professionals, employers may be able to move the needle by enhancing communication efforts between and among former employees and the custodian where their orphaned plan balances are held. Of course, this is provided current contact information for the former employee can be obtained.
Step in: National Registry of Unclaimed Retirement Benefits (NRURB)
One initiative in this regard is the National Registry of Unclaimed Retirement Benefits (NRURB), a part of the PenChecks family of companies. PenChecks is the largest independent processor of retirement benefit distributions in the U.S.
NRURB can be used by plan sponsors to connect former employees and their retirement benefits. Operating as a free public service, NRURB assists employers, plan fiduciaries, and former employees in locating each other to enable the claiming of overlooked or abandoned retirement benefits. Each year, the participant database undergoes a thorough address search to continue NRURB’s mission of reuniting individuals with their retirement funds.
Crucially, if a participant conducts a search on the NRURB website and unclaimed retirement funds are identified, NRURB notifies the former plan sponsor or custodian holding the funds and provides them with the participant’s contact information.
As efforts continue to bridge the gap between workers and unclaimed benefits, resources such as those provided by the NRURB and the soon to be established Retirement Savings Lost and Found database will assist Plan Sponsors in addressing this important issue.