The Department of Labor’s Employee Benefits Security Administration (EBSA) has released new guidance for locating missing participants. Missing or lost participants have been a focus of EBSA for some time. The guidance comes in three pieces: a Field Assistance Bulletin relating to terminated defined contribution plans, a Compliance Assistance Release detailing EBSA’s investigation policies relating to missing participants, and finally, a list of best practices for plan sponsors. You can find the full list here.
EBSA notes that not every practice outlined is necessary or appropriate for every plan and plan fiduciaries should establish reasonable and cost effective practices for their unique participant population, including considering the size of the participants accrued benefit when compared to the cost of search efforts.
The list is broken down into two categories: how to avoid losing participants in the first place and the steps that should be taken once a participant becomes unresponsive, or mail is returned.
The most effective method for avoiding lost participants is maintaining accurate census information while a participant is still employed and upon termination. That maintenance should include regular audits of census information as well as regular prompts for participants and beneficiaries to confirm contact information. Working to flag and remedy undelivered mail and email is another important strategy. Another flag to watch out for is terminated participants who have not taken their required minimum distributions.
For many plan sponsors, the recordkeeper is an important partner in maintaining accurate census information. Be sure to understand how that recordkeeper audits census information and prevents losing participants. Further, in the case of a change in recordkeepers, be sure to understand how participant data will be handled during the transition.
Missing Participant Searches
EBSA details several steps that plan sponsors may take once a participant has become unresponsive. Some of these include:
- Checking for contact information through other payroll or benefit records, such as group health plans
- Checking with named plan beneficiaries
- Using free online search engines or other public record databases
- Using a commercial locator service
- Checking in with colleagues of the participant
- Registering the missing participant on a public or private pension registry, like the National Registry of Unclaimed Retirement Benefits
Finally, as with all fiduciary activities, documentation is key. Keep documentation of the plan’s policies for missing participants, including policies from the plan’s recordkeeper, as well as the actions taken to locate missing participants.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.