Department of Labor ("DOL") is responsible for administering and enforcing the fiduciary, reporting and disclosure provisions of Title I of ERISA and has focused its enforcement efforts in recent years on the maintenance of complete and accurate census information by plan fiduciaries. To that end, the DOL issued guidance on January 12, 2021 describing best practices that prudent retirement plan fiduciaries should consider implementing to ensure that plan participants receive promised benefits when they reach retirement age. This guidance is consistent with positions taken by the DOL in enforcement investigations.
The guidance first identified several "red flags" that indicate that a plan has a problem with missing or nonresponsive participants:
- More than a small number of missing or nonresponsive
- More than a small number of vested participants who have reached normal retirement age but have not started receiving their pension benefits.
- Missing, inaccurate, or incomplete contact information or census data, or both.
- Absence of sound policies and procedures for handling undeliverable mail or email.
- Absence of sound policies and procedures for handling uncashed or stale checks.
By contrast, plans that have low numbers of missing and nonresponsive participants demonstrate an "ongoing culture of fiduciary compliance" and have implemented some or all of the following best practices:
Maintain accurate census information for the plan's population by:
- Periodically contacting current and retired participants to confirm or update contact information for themselves and
- Including contact information change requests in plan communications along with reminders to advise the plan of any contact information changes.
- Flagging undelivered communications and uncashed checks for follow-ups.
- Maintaining and monitoring an online platform for the plan that participants can use to update contact information for themselves/beneficiaries.
- Providing prompts for participants/beneficiaries to update contact information when they log in to online platforms.
- Conducting regular audits of census information and correcting any errors found.
- In the case of business mergers/acquisitions or a change of record keepers, making missing participant searches and employer records part of the collection and transfer of records.
Implement effective communication strategies by:
- Using plan language and offering non-English language assistance where appropriate.
- Encouraging contact through plan/plan sponsor websites and toll free numbers.
- Building steps into the employer and plan onboarding and enrollment processes for new employees, and exit processes for separating or retiring employees, to confirm or update contact information, confirm information needed to determine when benefits are due and correctly calculate the amount of benefits owed, and advise employees of the importance of ensuring that the plan has accurate contact information at all times.
- Communicating information about how the plan can help eligible employees consolidate accounts from prior employer plans or rollover IRAs.
- Clearly marking envelopes and correspondence with the original plan or sponsor name for participants who separated before the plan or sponsor name changed, for example, during a corporate merger, and indicating that the communication relates to pension benefit rights.
Conduct missing participant searches by:
- Checking related plan and employer records for participant, beneficiary and next of kin/emergency contact information. While the plan may not possess current contact information, it is possible that the employer's payroll records or the records maintained by another of the employer's plans, such as a group health plan, may have more up-to-date information. If there are privacy concerns, the person engaged in the search can request that the employer or other plan fiduciary forward a letter from the plan to the missing participant or beneficiary.
- Checking with designated plan beneficiaries (e.g., spouse, children) and the employee's emergency contacts (in the employer's records) for updated contact information; if there are privacy concerns, asking the designated beneficiary or emergency contact to forward a letter to the missing participant or beneficiary.
- Using free online search engines, public record databases (such as those for licenses, mortgages, and real estate taxes), obituaries, and social media to locate individuals.
- Using a commercial locator service, a credit-reporting agency, or a proprietary Internet search tool to locate individuals. Attempting contact via United States Postal Service ("USPS") certified mail, or private delivery service with similar tracking features if less expensive than USPS certified mail, at the last known mailing address.
- Attempting contact via other available means such as email addresses, telephone and text numbers, and social media.
Document procedures and action by:
- Reducing the plan's policies and procedures to writing to ensure they are clear and result in consistent practices.
- Documenting key decisions and steps taken to implement policies.
- For plans using TPAs to maintain records and send participant communications, ensuring that the record keepers are performing all agreed upon services and working with them to correct any issues in their practices.
The DOL also clarified that "not every practice [above] is necessarily appropriate for every plan" and that the specific steps taken to locate missing participants may vary due to "facts and circumstances particular to a plan and participant." Therefore, responsible plan fiduciaries will need to consider what missing participant practices "will yield the best results in a cost effective manner for their plan's particular population," given the size of the benefit to be paid and the cost of the search efforts.
DOL Compliance Assistance Release 2021-01; EBSA FAB 2021-01
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