The Department of Labor unveiled three pieces of guidance late Tuesday related to missing participants.
The first outlined a range of best practices retirement plan fiduciaries should consider to help reduce missing-participant issues and ensure that participants receive promised benefits. The steps include maintaining accurate census information for the plan's participant population; implementing effective communication strategies; conducting missing participant searches; and documenting those procedures and actions.
"This is a good summary of a lot of the positions that department has taken in investigations over the past six or so years," said Michael P. Kreps, principal at Groom Law Group. "So this really the first time they're taking what the investigators are telling us and putting it into writing. "
The Labor Department outlined 10 ways plans should search for missing participants, including checking related plan and employer records for participant, beneficiary and next of kin/emergency contact information; attempting contact via other available means such as email addresses, telephone and text numbers, and social media; and reaching out to the colleagues by publishing a list of missing participants on the company's intranet, in email notices to existing employees, or in communications with other retirees who are already receiving benefits.
The plan sponsor and record-keeping communities have for years asked the Labor Department for guidance on how best to search for missing participants and when they can prudently stop looking.
But the guidance will be "disappointing to plan sponsors who wanted more clarity as to exactly what they need to do," Mr. Kreps said. "It's a big laundry list of best practices but it doesn't tell you which ones you need to do to meet your fiduciary obligations, it's more of a facts and circumstances test."
Moreover, some of the steps outlined in the guidance, specifically reaching out to a missing participant's former colleagues, are unrealistic, Mr. Kreps added. "Not only are there privacy concerns and fraud concerns but there are resource limitations and you can only do so much," he said.
The second piece of guidance unveiled Tuesday outlined the general investigative approach for Employee Benefits Security Administration's regional offices under its Terminated Vested Participants Project, which encompasses missing participants.
Of the $2.6 billion EBSA recovered in enforcement actions in fiscal year 2020, roughly $1.5 billion was from its TVPP.
When opening TVPP investigations, the Labor Department said it focuses on plans that appear to have systemic issues with plan administration, particularly issues related to keeping track of terminated vested participants and beneficiaries and timely distributing benefits.
The information officials ask for during such investigations include plan documents; participant census records; the plan's procedures for communicating with participants, spouses and other designated beneficiaries; and information to determine whether the plan has taken sufficient steps to address missing participant situations when they occur.
Investigators look for systemic errors in plan record keeping and administration and inadequate procedures for contacting participants nearing normal retirement age, among other things, the Labor Department said.
Lastly, the Labor Department published a field assistance bulletin that authorizes — as a matter of enforcement policy — plan fiduciaries of terminating defined contribution plans use of the Pension Benefit Guaranty Corp.'s missing participant program for missing or non-responsive participant's account balances.
Pending further guidance, the Labor Department said it will not pursue violations against either responsible plan fiduciaries of terminating DC plans or qualified termination administrators of abandoned plans in connection with the transfer of a missing or non-responsive participant's or beneficiary's account balance to the PBGC.
