Get access to the exclusive HR Resources you need to succeed in 2018.
Sign up for free email newsletters and get more SHRM content delivered to your inbox.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 14 cities across the U.S. this fall.
Gain the skills you need to rise to the next level in your career. Jon us at SHRM's Leadership Development Forum, October 2-3 in Boston.
Use Internet to Find Missing Participants, DOL Says
The U.S. Department of Labor on Aug. 14, 2014, issued a new set of guidance for tracking missing defined contribution retirement plan participants and distributing their assets. Field Assistance Bulletin 2014-1 takes into account improved Internet search capabilities available to plan sponsors.
Plan fiduciaries can start by using free Internet search tools, which may include search engines, public records, obituaries, and social media, the DOL advised. But “If the free or cheap options don’t work, fiduciaries can’t stop there,” noted an alert by Bryan Cave benefits attorneys. Fiduciaries need to consider how prudent it would be to use other tools, such as commercial locator services, credit reporting agencies, information brokers, and investigation databases.
“Many of those services can be quite cost effective, so it’s important to research them thoroughly before dismissing them out of hand,” according to Bryan Cave. “The DOL notes that the exact steps will depend on the facts and circumstances.”
At an Aug. 28, 2013, hearing held by the Department of Labor's ERISA Advisory Council (EAC) to consider the problem of lost and missing participants from 401(k) and other defined contribution retirement plans, American Airlines Senior Benefits Counsel Vicki Blanton pleaded for more regulatory guidance to assist plan sponsors in locating these participants and ensuring they receive their due benefits.
In her testimony on behalf of the American Benefits Council, an employers group representing benefit plan sponsors, Blanton said that “with proper guidance, plans could save millions of dollars in wasted postage and the cost of printing while advancing the intended goal of reaching and informing participants of plan benefits.”
Among Blanton’s recommendations:
“Our ongoing plans present unique challenges, given the mobile employee population and base transfers, which cause a need for additional data,” Blanton testified. “The issuance of clarifying guidance—with an understanding of the cost and administrative burdens imposed upon plan sponsors—would make the location of lost participants much more effective.”
The ERISA Industry Committee (ERIC), along with the Plan Sponsor Council of America (PSCA) and the U.S. Chamber of Commerce submitted a group letter the PBGC supporting the agency’s efforts to implement a missing participants program in 401(k) and similar plans.
“ERIC believes that a missing participant program run by the PBGC would create a win-win situation for both sponsors and participants, as terminating plans oftentimes cannot find lost participants, and participants many times don’t know where to look for lost benefits or cannot find their former plan,” said Kathryn Ricard, ERIC’s senior vice president for retirement policy, in a separate statement.
The letter explained that there is significant demand for a missing participants program, as plan sponsors are frequently unable to find IRA providers to accept smaller account balances, particularly those with less than $1,000.
“We anticipate that many fiduciaries would be interested in using services provided by the PBGC, particularly for smaller accounts. However, the demand for such services would be impacted by the fees charged by the PBGC and any regulatory burden that was imposed,” Ricard said.
ERIC, PSCA and the Chamber recommended that the PBGC create a program whereby fiduciaries of terminating plans that transfer the accounts for missing participants to the PBGC can be confident that:
The groups also encouraged the PBGC to coordinate with the U.S. Department of Labor to provide fiduciary relief for plans that use the missing participants program. However, they emphasized that the PBGC should not delay the creation of the program in order to obtain this relief.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
HR Education in a City Near You
SHRM’s HR Vendor Directory contains over 10,000 companies