Source: FYI® (For Your Information®) Buck Consultant’s newsletter
The IRS issued Revenue Procedure 2012-35 to update its letter-forwarding program forhumane purposes. The prior version, contained in Revenue Procedure 94-22, authorized theforwarding of letters from retirement plan administrators in an effort to locate missingparticipants or beneficiaries. The new procedure, which applies to letter-forwarding requestspostmarked on or after August 31, 2012, does not authorize the forwarding of letters fromretirement plan administrators to missing participants. Consequently, plan administrators willbe limited to using private locator services or the Social Security letter-forwarding program in
attempting to reach participants or beneficiaries that they cannot find.
Under Revenue Procedure 94-22, the letter-forwarding program was made available to individuals,
corporations and organizations, and state and federal governmental agencies attempting to locate
missing individuals for a humane purpose. Humane purposes included family members seeking to
establish contact to reunite with a missing relative, a company or organization (such as a plan
administrator or the sponsor of a qualified retirement plan) holding assets that may be due a missing
individual, or a state or federal agency seeking assistance in locating a missing individual. Under the
prior procedure, the requester would submit a letter explaining why the letter needed to be forwarded
and provide both the Social Security number of the missing individual and a copy of the letter to be
forwarded. If the IRS located an address, the letter would be forwarded in an IRS envelope. The
recipient would be advised that the IRS did not divulge to the requester either the recipient’s address or
the fact that the letter was forwarded, and that the decision whether to respond is entirely that of the
recipient. There was no charge for forwarding 49 or fewer requests. For 50 or more requests, there
was a flat charge of $1,750, plus $0.01 per address search and $0.50 per letter forwarded.
IRS Withdraws Forwarding Service for Plans
In Revenue Procedure 2012-35, the IRS states that it will no longer forward letters from plan
administrators to missing participants because several alternative missing person locator services,
including the Internet, have become available since 1994 and because the IRS no longer views
reuniting individuals with financial assets to be a humane purpose.
Social Security and Other Options
Although the IRS will no longer be forwarding letters to missing participants, the Social Security
Administration continues to offer a letter-forwarding program for situations in which a missing person is
due "a sizeable amount of money,” among other reasons. Letters should be sent to the address in
Baltimore, Maryland noted at the website, along with a nonrefundable check for $25 per letter.
The Department of Labor (DOL) in Field Assistance Bulletin 2004-02 suggested a number of other
options for locating a missing participant or beneficiary before determining that such individual cannot
be found and disposing of his/her account balance when terminating a defined contribution plan. The
DOL suggests the following options as additional methods for searching for a missing participant or
- Use certified mail
- Check the records of related plans to the extent not precluded by privacy requirements
- Check with the designated plan beneficiary
- Use a commercial locator service or a credit reporting agency
As part of their effort to comply with required plan participant communications,many plan sponsors audit participant records on a regular basis to ensurecontact information -- such as addresses -- is current. This audit also helpsidentify participants who died, resulting in more accurate reporting of liabilitiesand a reduction in PBGC premium costs. Buck Consultants offers a Retirement
Plan Alive Audit specifically aimed at this type of review.
Given the availability of a number of alternative resources, as a practical matter, the elimination of the
IRS’s letter-forwarding program should not adversely affect plan administration or operations.
This FYI is intended to provide general information. It does not offer legal advice or purport to treat all the issues surrounding any one topic. © 2012 Buck Consultants®, L.L.C. All Rights Reserved