New DOL guidance on missing participants; What employers should know | Thompson

On January 12, 2021, the Department of Labor (DOL) issued long-awaited guidance to assist employers and plan administrators in dealing with the issue of missing participants under retirement plans subject to ERISA. The guidance is comprised of three documents; a list of “best practices” for retirement plans, a description of the DOL’s Terminated Vested Participants Project for defined benefit plans, and a Temporary Enforcement Policy with respect to missing participants of terminating defined contribution plans.

Best practices for missing participants

The document, titled “Best Practices for Pension Plans,” lists the following “red flags” that suggest to the DOL that an employer may have a problem with missing participants:

• More than a small number of missing or nonresponsive participants;
• More than a small number of terminated vested participants who have reached normal retirement age but have not yet started their benefits;
• Incomplete or inaccurate contact information or census data;
• Lack of policies and procedures for dealing with returned or undeliverable mail;
• Lack of policies and procedures for dealing with uncashed checks.[1]

According to the DOL, a common characteristic of compliant employers is a commitment to ensure that plan records are complete. Such employers do not rely on a one-time or sporadic fixes of plan records but instead foster a culture of consistent compliance through some or all of the following best practices:

Accurate census information

• Periodically contacting participants (current and retired) and beneficiaries to confirm their contact information, including home and business addresses, telephone numbers (including cell phones), social media contact information and emergency contact information;
• Reminding participants and beneficiaries to update contact information in plan communications;
• Following up on undeliverable mail and uncashed checks;
• Maintaining and monitoring an online platform that participants can use to update contact information;
• Integrating changes in contact information into the plan census data;
• Including prompts for participants and beneficiaries to confirm contact information upon login to an online platform;
• Regularly requesting updated contact information for beneficiaries;
• Regularly auditing plan records and correcting errors;
• Including missing participant searches as part of the process of transferring of plan information in connection with a change in recordkeepers or a merger or acquisition.[2]

Effective communication strategies

• Using plain language (and non-English language if appropriate);
• Prominently stating a request for updated contact information;
• Facilitating contact through plan or employer websites and toll-free telephone numbers;
• Including in enrollment and separation procedures steps to update contact information and other information needed to determine the amount and timing of benefits, and instructing participants of the importance of keeping the plan informed of changes in contact information;
• Communicating the method for consolidating accounts from prior employer plans or rolling over individual retirement accounts (IRAs); and
• Using the original plan and/or sponsor name in communications to participants who terminated employment before the plan or employer name changed (e.g., due to merger or acquisition) and noting that the communication relates to pension benefits.[3]

Missing participant searches

• Checking payroll records and records maintained for other employer plans for contact information;
• Checking with designated beneficiaries and emergency contacts for contact information for the participant;
• Using free online search engines, public data bases, obituaries and social media to contact participants and beneficiaries;
• Using a commercial locator service, credit-reporting agency or a proprietary internet search tool;
• Using the United States Postal Service certified mail (or a private…