The Department of Labor is investigating benefit payment practices of the defined benefit plans of a number of Fortune 500 companies.

DOL’s focus, according to law firm Morgan Lewis & Bockius, is on locating missing participants, informing deferred vested participants that a retirement benefit is payable, and commencing benefit payments when the participant reaches age 70½.

Brad Campbell, the former head of DOL’s Employee Benefits Security Administration, who’s now counsel with law firm Drinker Biddle & Reath in Washington, told ThinkAdvisor that while the investigation doesn’t necessarily impact RIAs and brokers with “respect to their plan clients,” these investigations could be an issue for RIAs and brokers to be aware of “when advising personal wealth clients who may be entitled to benefits from a previous employer, as this could be a source of retirement income that a client may not remember.”

The law firm Morgan Lewis & Bockius noted in a recent blog post that while the initiative was launched out of DOL’s Philadelphia office, DOL has indicated that “it intends to expand the investigation further.”

As the investigation builds momentum – and gains publicity — Morgan Lewis wrote, “plan sponsors and administrators of defined benefit plans should consider whether a review of plan procedures for locating participants and paying benefits would be timely.”

While the issue of benefit payments — in particular the payment of benefits at the participant’s required beginning date (that is, in connection with the participant reaching age 70½) — has long been a focus of Internal Revenue Service retirement plan audits, the lawyers write, the DOL’s focus on the area is new.

Morgan Lewis notes that DOL says it has discovered, among other things, that some plans under investigation have procedures for locating missing participants, but the procedures are not being followed in practice; and that at least a few of the plans seemed to have significant recordkeeping problems and could not verify the age of their participants, with the obvious consequence that the plans could not pay participant benefits when required.

The Morgan Lewis lawyers recommend that plan sponsors and administrators revisit plan procedures for addressing “both missing participants and gaps in plan records.”

Plan sponsors and administrators, the lawyers say, may want to consider addressing these issues “as part of a more comprehensive legal audit of their plans, which could cover both administrative and fiduciary obligations.”

Regardless of the actions taken, they continue, “fiduciaries should take care to memorialize their activities and document efforts to fulfill their administrative duties. Once written procedures are in place, plan fiduciaries should monitor whether they are being followed in practice.”

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