Playing Hide and Seek with Participants?

Keeping track of former participants not only benefits their retirement prospects, it is also a fiduciary issue. Here are some guidelines from the DOL about how to maintain connection with them, and what to do if you need to conduct a search.

The Department of Labor (DOL) released guidance in January 2021 that will help plan sponsors keep track of participants. Finding former employees who still have plan balances but no longer work for the company can be challenging. And losing track of them may be a fiduciary issue because of the “exclusive benefit” rule set down in ERISA. It requires that plans diligently seek to distribute assets, even to missing or unresponsive participants.

Best Practices for Pension Plans is one of a set of three related publications released by the DOL on January 12, 2021. It provides information to help plan sponsors recognize red flags that could lead to losing track of participants, and cites examples of best practices plans can use to avoid the situation.

A few of the DOL’s suggestions for avoiding trouble with missing participants are:

  • Maintain accurate census information. Consider periodic contacts with participants and beneficiaries, to be sure their contact information is correct. Endeavor to keep home and work addresses, phone numbers, social media contact information, and emergency contact information.
  • Follow up on undeliverable mail or email and uncashed checks.
  • Keep beneficiary information up-to-date.
  • Put the plan’s policies and procedures in writing, and be consistent in following them.

If you do “lose” participants, the DOL has some suggestions for your searches:

  • Cross-check other contact information that may be available, such as health plan records, for data that may lead to the missing participant.
  • Ask colleagues who worked closely with the missing participant if they have a forwarding address. Of course, it is important to maintain privacy, so you may want to ask the colleague or beneficiary to forward a letter for you, or to ask the missing participant to get in touch with your office.

Access the DOL’s guidance here.

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Heartland Retirement Plan Services are offered through Dubuque Bank and Trust Company. The information provided herein is general in nature and is not intended to be nor should be construed as specific investment, legal or tax advice. The factual information has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Heartland Retirement Plan Services makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, it. Products offered through Heartland Retirement Plan Services are not FDIC insured, are not bank guaranteed and may lose value, unless otherwise noted.

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© 2020 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.