Retirement plans of all sizes often find themselves faced with participants or beneficiaries who are either missing or do not respond to communication. The U.S. Department of Labor (“DOL”) has long been concerned with how plans try to locate and contact these ‘missing’ participants and, more importantly, how they try to prevent participants from becoming ‘missing’ in the first place. In the words of the DOL, “when plan participants and beneficiaries are ‘missing’ or unresponsive to plan communications…their benefits and retirement security are at risk.”
As part of their duty under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), to act prudently and in the best interests of plan participants and beneficiaries, plan fiduciaries should regularly review the practices and procedures in place under their plans relating to maintaining accurate participant contact information, clearly and regularly communicating with participants, and making efforts to avoid losing track of participants. If such a search reflects that a plan has more than isolated occurrences that suggest participants are ‘missing’ (e.g., undeliverable correspondence, uncashed checks, or participants who reach retirement age and fail to commence distributions), this is a sign that changes should be considered.
To aid in this effort, on January 12, 2021, the DOL released three pieces of helpful guidance: a list of best practices for locating and tracking missing participants; a compliance assistance document describing the DOL’s missing-participant investigations; and a field assistance bulletin temporarily easing enforcement activities relating to ERISA violations relating to missing participants.
‘Best practices’ include: being proactive about reviewing and updating participant data and identifying information, ensuring that plan communications are effective and reach their target audience, actively searching for participants who cannot be reached, and keeping records of the plan’s policies and efforts.
In addition to compiling these best practices that apply to all plans, the DOL issued Compliance Assistance Release No. 2021-01, which outlines the investigative process and case-closing practices for regional offices of the Employee Benefits Security Administration under its Terminated Vested Participants Project. This is intended to standardize the investigative process relating specifically to missing participants in defined benefit plans and to facilitate voluntary compliance efforts by plan fiduciaries. The third, and final, piece of DOL guidance relating to missing and nonresponsive plan participants was a memorandum announcing a temporary enforcement policy relating to the use by terminating and abandoned defined contribution plans (e.g., 401(k) plans) of the Pension Benefit Guaranty Corporation’s Missing Participants Program in lieu of automatically disbursing benefits to IRAs and state unclaimed property repositories.
You can find much more information about this DOL guidance HERE, and for assistance with reviewing your plan policies and fiduciary practices relating to missing and non-responsive participants, please reach out to any member of our team.