In January of 2021 the Department of Labor (DOL) released helpful guidance to assist employers in locating missing or unresponsive retirement plan participants. While connecting plan participants with their retirement plan accounts has been a significant area of focus for the DOL for some time now, it’s also an important fiduciary obligation that should be addressed on a regular basis.
The DOL provided three forms of guidance:
- Missing Participants – Best Practices for Pension Plans: Providing a list of steps for fiduciaries to follow to reduce the frequency of missing participants, this guidance consists of four categories:
- Maintaining accurate census information for the plan’s participant population: This includes, but is not limited to, contacting participants on a periodic basis to confirm/update their contact information; flagging undeliverable mail and uncashed checks for follow-up; providing prompts for participants and beneficiaries to confirm contact information; and regularly auditing census information and correcting data errors.
- Implementing effective communication strategies: Suggestions include, among others, using plain language and offering non-English language assistance when and where appropriate; encouraging contact through plan/plan sponsor websites and toll free numbers; and building steps into onboarding and exit interview processes to confirm or update contact information. If there’s been a name change, clearly mark envelopes and correspondence with the original plan or sponsor name for participants who separated before the change occurred.
- Missing participant searches: The guidance includes a number of helpful tips, such as checking with colleagues, designated beneficiaries or the employee’s emergency contacts for updated information; using free online search engines as well as public record databases, obituaries and social media; using a commercial locator service or credit-reporting agency; and attempting to contact via United States Postal Service using certified mail or private delivery services with similar tracking features.
- Documenting procedures and actions: This last step may in fact be one of the most important, as policies and procedures are of the utmost importance from the DOL’s perspective. Fiduciaries should have their policies and procedures for locating missing participants in writing, documenting key decisions and steps taken to implement these policies.
- Compliance Assistance Release No. 2021-01:Issued as an internal memo, the Release provides visibility into investigations being conducted by EBSA as part of its Terminated Vested Participants Project (TVPP).Although these investigations have been directed only at defined benefit plans to date, the memo gives important insight into the agency’s investigative thought process and the “red flags” that can lead to an investigation. Specifically, the agency watches for large numbers of terminated participants reported on the annual Form 5500, as well as bankruptcy or merger/acquisition activity. In addition, EBSA provides assistance to participants who contact the agency and indicate they are not being provided an opportunity to claim benefits they are entitled to receive.
- Field Assistance Bulletin (FAB) 2021-01:While in place for many years for defined benefit plans, the Pension Benefit Guaranty Corporation Missing Participant Program (PBGC Program) was expanded in 2017 to provide defined contribution plan sponsors an opportunity to transfer unclaimed account balances to the PBGC following a plan termination. This FAB creates a temporary enforcement policy indicating that the DOL will not pursue ERISA violations against plan fiduciaries that make use of the PBGC Program for missing or unresponsive plan participants, as long as fiduciaries act with a good faith, reasonable interpretation of ERISA and the requirements of the program. However, this temporary enforcement policy does not prevent the Department from pursuing violations for failure to diligently search for participants and beneficiaries, or to maintain plan and employer records.
Each of these important pieces of guidance is unfortunately just that…guidance. That means it’s not formal or legally binding. However, it provides important insight into the DOL’s expectations for retirement plan fiduciaries and their efforts to unite employees with their well-deserved retirement benefits.
For more information on locating missing participants or for further retirement plan guidance, visit www.cbiz.com/retirement
CBIZ Retirement Plan Services is a trade name under which certain subsidiaries of CBIZ, Inc. (NYSE Listed: CBZ) market investment advisory, investment management, third party administration, actuarial and other retirement plan services. Investment advisory and investment management services offered through CBIZ Investment Advisory Services, LLC, Registered Investment Adviser. Investments, investment advisory and investment management services may also be offered through CBIZ Financial Solutions, Inc., Member FINRA, SIPC and Registered Investment Adviser, dba CBIZ Retirement Plan Advisory Services. Third party administration, actuarial and other consulting services offered through CBIZ Benefits & Insurance Services, Inc.