Missing Participants in Employee Benefit Plans

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October 22, 2020 – A recent “hot topic” within the Department of Labor (DOL) has been the fiduciary responsibility under the Employment Retirement Income Security Act of 1974 to maintain accurate retirement plan participant contact information, especially when participants have terminated employment with the plan sponsor. By not doing this, plans run the risk of having “missing participants,” or those participants who are no longer under employment but still have benefits available under the plan. Continuously maintaining current participant data can be a challenging task for all types of retirement plans; however, can prove especially difficult for defined benefit plans, where it is common to have participants who have not worked for the plan sponsor in (potentially) decades. Additionally, the industry continues to see increases in company mergers, spin-offs, acquisitions, or changes in service providers, which all may result in the loss or inadvertent destruction of original personnel information. Locating missing participants can create a major headache for plan fiduciaries when those participants are required to take distributions, either as stipulated by the plan document (for example, upon retirement age for a defined benefit plan), or by regulation (for example, upon the attainment of age 70 ½).

In the event there are missing participants, the fiduciary’s responsibility extends to making every attempt possible to locate them. Failing to do so not only constitutes a breach of this responsibility, as determined by the DOL, but may also jeopardize the plan’s tax-exempt status if those participants do not receive distributions in accordance with the plan document. Unfortunately, the DOL has provided little authoritative guidance on what actions need to be taken to locate these participants, and at what point fiduciary responsibility in this regard has been exhausted. While specifically discussing missing participants as it relates to terminated defined contribution plans, the DOL in its Field Assistance Bulletin No. 2014-01 (FAB 2014-01) does list the following search methods as the minimum steps the fiduciary must take to locate a participant:

  • Send a notice using certified mail
  • Check the records of the employer or any related plan of the employer
  • Send an inquiry of the designated beneficiary of the missing participant
  • Use free electronic search tools

FAB 2014-01 also provides distribution options available for a participant who, upon using the above search methods, still cannot be located. Given recent DOL attention on this issue, it is also recommended that any plans who have missing participants consult with legal counsel on the best course of action in locating them.

This article is an excerpt from Dopkins Employee Benefits Newsletter.  To read the complete content, please click here.

For more information, please contact Justin Renaud at jrenaud@dopkins.com.

About the Author

Justin S. Renaud CPA

Justin is a member of Dopkins Assurance Services Group. He helps provide management with financial information by researching and analyzing accounts and preparing financial statements.

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