On January 12, 2021, the Department of Labor (DOL) released a triple shot of guidance related to helping retirement plan fiduciaries meet their obligations under the Employee Retirement Income Security Act (ERISA) to distribute retirement benefits to missing participants.
The first piece of guidance, titled Best Practices for Pension Plans, provides a list of best practices that DOL suggests retirement plan fiduciaries utilize in developing their missing participant processes. The list includes suggestions for maintaining accurate census information for the plan's participant population; implementing effective communication strategies; conducting missing participant searches; and documenting those procedures and actions.
DOL outlines a number of general strategies that plans should consider employing when searching for missing participants, including:
- checking related plan and employer records for participant, beneficiary and next of kin/emergency contact information;
- using free online search engines, public record databases (such as those for licenses, mortgages and real estate taxes), obituaries, and social media to locate individuals;
- attempting contact via other available means such as email addresses, telephone and text numbers, and social media; and
- contacting former colleagues and listing missing participants’ names on company intranet sites.
| ESsentials: Sponsors have raised privacy concerns relating to a number of these strategies. DOL acknowledges these concerns and generally recommends that, if these concerns are present, asking the relevant parties (e.g., beneficiaries, other related plans) to forward letters to the missing participants. |
| ESsentials: DOL notes that not all of the listed strategies will be appropriate or necessary for every plan. Also, DOL states that fiduciaries can consider “the size of a participant’s accrued benefit and account balance as well as the cost of search efforts.” This is a welcome point of view in light of the one-size-fits-all approach that some plan sponsors have experienced with DOL investigators. |
The guidance emphasizes that one best practice is having a written policy in place with respect to the plan's procedures on locating missing participants.
| ESsentials: In addition to the practical benefits that may arise from having such a policy in place, it seems probable that evidence of this written policy will be required in DOL investigations and similar settings. Therefore, plan fiduciaries will likely want to consider putting one in place now. |
The second piece of guidance, Compliance Assistance Release 2021-01, outlines the general investigative approach for the regional offices of the Employee Benefits Security Administration (EBSA) under its Terminated Vested Participants Project (TVPP). This release is intended to make the investigative process relating to missing participants in defined benefit plans under the TVPP more uniform across the country. It also describes the types of records and documents that EBSA has requested during its investigations in the recordkeeping or administration of benefits for terminated vested participants and beneficiaries and the red flags that it looks for.
The third piece of guidance is Field Assistance Bulletin 2021-01, which provides a temporary enforcement policy under which DOL will not pursue a fiduciary breach claim against a plan fiduciary that transfers the accounts of missing participants in terminating defined contribution plans to the Pension Benefit Guaranty Corporation (PBGC) as part of the PBGC’s missing participant program. Normally, there is a safe harbor only for transferring such accounts to an IRA or, in limited circumstances, to a bank account or state unclaimed property fund.
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