As employees terminate, they typically leave their balances with the prior employer. In these cases, they are still participants – meaning you still pay to administer their account, and you have an obligation to communicate with them as much as any active employee. This is not a problem, until you lose track of the ex-employee. While it is not your Fault, it is still your responsibility under the law.
50% of Millenials in a recent survey learned of a retirement account with a previous employer they didn’t realize they had.
Enter the “Missing Participant IRA.” The best solution is to get the ex-employee to take their balance with them when they leave. Since that doesn’t always work, you need a mechanism to handle this. With some of our clients we use a third-party outside service, but more and more high-end TPAs are providing this service automatically.
If you are concerned about COMPLIANCE in your 401k just give us a call.