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John W. Sleeting

Managing Partner – Family Office Services

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Karie M. OConnor,
CIMA®, CPFA®, AIFA®, QKA®

Director – Institutional Advisory Services

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Jeffrey P. DeHaan, CFP®

Managing Partner – Private Wealth Management

Bridging the Gap: Connecting Workers with Unclaimed Retirement Benefits

Karie M. OConnor Kevin G. Carani March 01, 2024

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.

Karie M. OConnor

Kevin G. Carani

disclosure

THIS COMMENTARY HAS BEEN PREPARED BY CLEARWATER CAPITAL PARTNERS. THE OPINIONS VOICED IN THIS MATERIAL ARE FOR GENERAL INFORMATION ONLY AND ARE NOT INTENDED TO PROVIDE OR BE CONSTRUED AS PROVIDING LEGAL, ACCOUNTING, OR SPECIFIC INVESTMENT ADVICE OR RECOMMENDATIONS FOR ANY INDIVIDUAL. ALL ECONOMIC DATA IS DERIVED FROM PUBLIC SOURCES BELIEVED TO BE RELIABLE. TO DETERMINE WHICH INVESTMENTS MAY BE APPROPRIATE FOR YOU, PLEASE CONSULT WITH US PRIOR TO INVESTING. INVESTING INVOLVES RISK WHICH MAY INCLUDE LOSS OF PRINCIPAL.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, insurance products, or to adopt any investment strategy. The opinions expressed are as of the date of writing and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Clearwater Capital Partners to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. S&P 500 is a registered trademark of Standard & Poor’s Financial Services, a division of S&P Global (“S&P”)  DOW JONES, DJ, DJIA and DOW JONES INDUSTRIAL AVERAGE are registered trademarks of Dow Jones Trademark Holdings (“Dow Jones”). The two main risks related to fixed-income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments.

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