After years of clamoring from the plan sponsor community, the Labor Department in January issued guidance in the form of a best practice list for locating missing participants and insight into how it approaches investigations on the matter.
The list of 27 best practices the Labor Department said retirement plan fiduciaries should consider in helping reduce missing participant issues 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. Before the new guidance, the Labor Department had no outlined process for plan sponsors to follow.
Moreover, 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, text and social media; and reaching out to the workforce 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.
With respect to 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 distribution of benefits. The information officials ask for during such probes 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.
Marcia S. Wagner, founder and managing partner at The Wagner Law Group, Boston, said she expects missing participant recoveries to continue to make up the bulk of EBSA's overall enforcement recoveries in 2022. "Plan fiduciaries are aware of the issue, and are devoting increased attention to the issue, but nonetheless that is likely to be the area of the greatest attention by the DOL," Ms. Wagner said.
David Levine, Washington-based principal and co-chairman of the plan sponsor practice at Groom Law Group, wasn't surprised that TVPP recoveries held steady at $1.5 billion in the fiscal year, but said the figure could dip moving forward. "I think the number of large plans where they 'have not gotten people their money' is shrinking because there's been a lot of attention paid to (the missing participant issue), which I think is the DOL's purpose," Mr. Levine said. "They're trying to protect the participant."