DOL Provides Guidance on Missing Participants

On January 12, 2021, the DOL released three documents addressing their policy on missing participants. The first two pieces – “Compliance Assistance Release No. 2021-01” and “Missing Participants – Best Practices for Pension Plans” – identify the steps that defined benefit plan sponsors should take when they are unable to find certain vested participants or beneficiaries. The third piece – “Field Assistance Bulletin No. 2021-01” – outlines the DOL’s temporary enforcement policy regarding the participation of terminated defined contribution plans in the Pension Benefit Guarantee Corporation (PBGC) missing participant program.

As background, employers must often deal with terminated employees they are unable to find. This potentially leads to individuals who do not receive their pension or defined contribution distributions, which is a problem for both the employer and the DOL.

Compliance Assistance Release No. 2021-01 is a document that outlines the DOL’s practices under the Terminated Vested Participants Project (TVPP). Pursuant to the TVPP, the DOL directs defined benefit plans to maintain adequate census and other records necessary to identify participants and beneficiaries that are due benefits under the plan, the amount of benefits due, and when such participants and beneficiaries are eligible to receive the benefits. The release goes on to highlight the circumstances under which TVPP investigations are opened, the information the DOL asks for in such an investigation, the errors they look for and how cases are closed.

In “Missing Participants – Best Practices for Pension Plans” the DOL gives employers examples of the practices they should undertake to ensure that missing participants are found to the best of the employer’s ability. The DOL specifically lays out how employers can go about:

• Maintaining accurate census information for the plan’s participant population
• Implementing effective communication strategies
• Conducting missing participant searches
• Documenting procedures and actions

Finally, in Field Assistance Bulletin No. 2021-01, the DOL announces a temporary enforcement policy on employers’ use of the PBGC’s Missing Participants Program when terminating defined contribution plans. As background, the PBGC’s defined contribution missing participants program will hold retirement benefits for missing participants and beneficiaries of terminated defined contribution plans. This bulletin states that the DOL will not pursue any employers who use that program to transfer funds to the PBGC instead of transferring them to an IRA, bank or savings account, or state unclaimed property fund. For an employer to rely upon this temporary enforcement policy, they must follow the program’s rules (including conducting a diligent search for the missing participants). They must also send notices to the participants and beneficiaries that state that the funds are being transferred to the program and include the PBGC’s website address and customer contact number. This temporary enforcement policy will remain in place until the DOL issues regulatory guidance.

Employers should look to these three pieces of guidance for insight into how they should handle terminated and/or missing employees.

Compliance Assistance Release No. 2021-01 »
Missing Participants – Best Practices for Pension Plans »
Field Assistance Bulletin No. 2021-01  »