Introduction to DOL Missing Participant Field Assistance Bulletin (FAB) 2021-01
Starting in 2015, the Department of Labor (DOL) launched the Terminated Vested Participant Program out of the Philadelphia office and then expanded the practice nationwide. Reporting by industry and major news outlets throughout 2017 and 2018 indicated that the definition of missing participants was no longer limited to term vested participants in Defined Benefit (DB) plans that were closing, but actually includes all term vested participants as evidenced by large fines that were levied when not enough was done by the plans to mitigate the issue. However, there remained no official guidance on who is considered missing and what plan sponsors’ responsibilities are. Consequently, on January 12, 2021, the DOL provided three official documents to provide guidance on how to define a missing participant, how to locate the participant, and how the DOL will audit plans (both Defined Contribution (DC) and DB) moving forward. See the full DOL press release at (https://www.dol.gov/newsroom/releases/ebsa/ebsa20210112) At long last, these documents provide clarification and end a long period of uncertainty.
Background on Missing Participant Audits
The previous Field Assistance Bulletin (FAB) was published in 2014. It focused on the Internal Revenue Service (IRS) and Social Security Administration (SSA) mail forwarding services which many plans utilized to locate missing participants. These mail forwarding programs were long considered the final stop on participant outreach before the closed plan was turned over to the Pension Benefit Guaranteed Association. The original guidance provided a decent starting point, but did not go far enough to explain plan sponsors’ responsibilities, nor did it address what must be done for participants that were unresponsive in plans that were not closing.
FAB 2014-01 provides that in order for a fiduciary of a terminated defined contribution plan to fulfill the duties of prudence and loyalty, the fiduciary must use the following search methods in locating unresponsive participants:
- Use Certified Mail.
- Check Related Plan and Employer Records. Plan fiduciaries must ask both the employer and administrator(s) of related plans to search their records for a more current address for the missing participant.
- Check with Designated Plan Beneficiary. In searching the terminated plan’s records or the records of related plans, plan fiduciaries must try to identify and contact any individual that the missing participant has designated as a beneficiary to find updated contact information for the missing participant.
- Use Free Electronic Search Tools. Plan fiduciaries must make reasonable use of internet search tools that do not charge a fee to search for a missing participant or beneficiary. Online services noted include internet search engines, public record databases (such as those for licenses, mortgages, and real estate taxes), obituaries, and social media. (https://www.ntsa-net.org/dol-missing-participants-guidance-gets-tech-savvy-refresh)
DOL Shift on Missing Participants
The January 12th DOL press release now formally clarifies what the DOL is expecting plans (both DB and DC) to do and how they will audit these activities moving forward. In future articles, we will further explore DOL audit and related processes. In the meantime, we encourage you to read the linked documents provided by the DOL:
- 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.
How To Solve Missing Participants
To ensure that you stay compliant with DOL requirements, just remember the 4 Rs: Review, Reach out, Research, and Record.
Review – Check your participant data to see if you are missing SSNs, dates of birth, name changes, addresses, phone numbers, or email addresses. The same goes for beneficiaries.
Reach out – When you correspond with participants, they might not know or remember that a merger took place. Include the original name of the company that they worked for as well as the current company. Quickly highlight the reason for the outreach so the mail doesn’t get thrown out. In any communication with the participant, ask that they update or confirm their contact information.
Research – Comprehensive commercial research companies, such as The Berwyn Group, can handle most of the steps in this section by identifying potential deceased participants, finding relatives, updating addresses, and even finding phone and email records. Instead of trying to recreate the wheel in-house, save time and resources by leveraging The Berwyn Group’s 30 years of experience and one stop access to our 10,000 record sources.
Record – One of the most important steps is to define repeatable processes to complete the above activities and record the results of those attempts, both internally and by your recordkeeper. As any auditor will tell you, if you didn’t document it, you didn’t do it!
If you or your plan need any assistance or have questions, please reach out to the experts. The Berwyn Group has a proven, 30-year track record of finding lost or missing participants for plans both large and small, recordkeepers, trusts, and TPAs.