New Labor Guidance Helps Retirement Plans Find Missing Participants
Employer trade groups have been asking for clarity on what they must do in attempt to locate missing participants, lawyer Fred Reish says.
The Labor Department has released guidance to help plan fiduciaries meet their obligations under Title I of the Employee Retirement Income Security Act to locate and distribute retirement benefits to missing or nonresponsive participants.
Labor “has been investigating plans on this issue and asserting fiduciary breaches where the plans didn’t track former employees who left account balances behind,” ERISA attorney Fred Reish, partner at Faegre Drinker in Los Angeles, told ThinkAdvisor in an email. “The private sector, eg., employer trade associations, have been complaining that the DOL hasn’t issued clear guidance on what fiduciaries need to do about former employees who can’t be located.”
Labor released three forms of guidance:
- Best Practices for Pension Plans describes a range of best practices fiduciaries of retirement plans, such as 401(k) plans, should consider as steps their plan could take to help reduce missing participant issues and ensure that plan participants receive promised benefits when they reach retirement age;
- Compliance Assistance Release 2021-01 outlines the general investigative approach that will guide all of EBSA’s Regional Offices under the Terminated Vested Participants Project and facilitate voluntary compliance efforts by plan fiduciaries; and
- Field Assistance Bulletin 2021-01 authorizes, as a matter of enforcement policy, plan fiduciaries of terminating defined contribution plans use of the PBGC missing participant program for missing or nonresponsive participant’s account balances.
Jeanne Klinefelter Wilson, acting head of EBSA, said in a statement that the guidance reflects Labor’s “ongoing commitment to help plan fiduciaries ensure that their plan participants and beneficiaries receive the retirement benefits that they worked so hard to earn.”
In fiscal 2020 alone, Wilson said, “EBSA’s investigators helped missing and nonresponsive participants recover benefits with a present value in excess of $1.4 billion.”