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Tracking down missing retirement plan participants is a pain point for plan sponsors since it can drain time and resources, particularly for small employers. However, it is the plan sponsor’s fiduciary duty to do so.
Yesterday, the Department of Labor’s Employee Benefits Security Administration offered some assistance for these plan sponsors with the announcement of an enforcement relief policy. The policy provides retirement plan fiduciaries with an option to help manage small benefit amounts owed to individuals who cannot be located.
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Under the policy, the department will not take action under the fiduciary duty provisions of the Employee Retirement Income Security Act against fiduciaries who transfer entire benefit payments owed to missing participants of $1,000 or less to state unclaimed property funds, if certain conditions are met.
To qualify for relief under this policy, plan fiduciaries must meet certain conditions, including:
Meet conditions designed to protect the interests of the missing individuals: The plan fiduciary determines that the transfer to a state unclaimed property fund is a prudent destination for the participant's or beneficiary's retirement benefit payments.
Adopt best practices for locating missing participants and beneficiaries: The plan fiduciary must implement a “prudent program” to find missing participants consistent with the Department's Best Practices for Pension Plans, and nevertheless has been unable to locate the participant or beneficiary.
Select state unclaimed property funds that meet the minimum standards outlined in the policy: The plan fiduciary selects the state unclaimed property fund offered by the state of the last known address of the participant or beneficiary and the state unclaimed property fund qualifies as an eligible state fund.
Plan sponsors should refer to Field Assistance Bulletin No. 2025-01 for further information and details.
“This policy gives fiduciaries an additional option for handling small outstanding retirement benefit payments owed to missing participants and beneficiaries,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “Our goal is to reunite participants and beneficiaries with their retirement benefits and this new policy will support fiduciaries’ ability to choose this option when prudent and provide individuals with another option for finding benefits that may be owed to them.”
Related: Tracking down missing participants: A ‘pain point’ for retirement plan sponsors
In December, the DOL’s Retirement Savings Lost and Found database launched, however, it still needs help from plan administrators on participants who left their company. A key SECURE 2.0 provision required the DOL to create the Lost and Found Database to help employees find missing retirement accounts.
“Our goal … is to make sure that workers and their beneficiaries receive all the retirement benefits they earned and were promised through their working careers so that they can look forward to a secure and enjoyable retirement,” said Gomez. “The Retirement Savings Lost and Found database will be another tool to help plans carry out this responsibility. We all need to work together to achieve that goal, and we appreciate the partnership of the retirement plan community in moving forward.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
