Revenue Procedure 2012-35 (8/31/12) announced that, effective immediately, the IRS’s letter forwarding program will no longer be available to retirement plans that are searching for lost participants. The program was widely used in the past because of its convenience and low cost to the plan (no charge for batches of fewer than 50 letters). Its effectiveness was, however, doubtful. Among other drawbacks, the IRS would not disclose the addresses to which the letters were sent or whether they reached their destinations. The PBGC’s regulations did not accept IRS forwarding as adequate to satisfy the requirement that the sponsor of a terminating plan must carry out a “diligent search” for lost participants.

The IRS’s rationale for limiting the program to a narrow class of “humane purposes” is that the Internet and other developments have created many alternative ways to locate individuals. Unstated, but likely, is that it has been a money loser.

The Social Security Administration maintains its own letter forwarding program, which charges $25 a letter and usually sends them to the recipient’s most recently known employer instead of his home address. This program, too, is unacceptable to the PBGC. Plans usually obtain better results by hiring commercial search firms or making use of on-line resources.