PLANSPONSOR - February/March 2021 - 39

INSIDE ANGLE
Missing Participants
Do new DOL best practices deliver on plan sponsors' requests?
O
n January 12, the Department of Labor (DOL) issued
best practice guidance detailing the department's view
of what steps plan fiduciaries should take to locate and
distribute retirement benefits to missing or nonresponsive participants.
It also issued an internal memorandum reflecting its
processes for conducting missing participant investigations.
For years, DOL investigations have focused on whether
employers and plan service providers have established procedures
to search for deferred vested missing participants. These investigations
raised many concerns within the regulation community
because of the lack of uniformity across the various field offices;
the aggressive enforcement positions taken by the DOL without
formally issued, legally binding guidance; and the length and cost
of investigations. The guidance summarized here reflects the
DOL's response to those concerns.
While the guidance provides the public with the DOL's views,
it does not establish clear, bright-line rules as many sponsors
requested. Notably, the guidance does not have the force and effect
of law. Therefore, whether it helps create a more efficient path
through missing participant investigations will have to be seen.
DOL Memorandum
The DOL's internal memorandum provides insight into what
factors it examines in an investigation. The department wrote that
an investigation could begin based on its review of a plan's Form
5500 and that a Form 5500 reporting a large number of retired or
terminated vested participants (TVPs) entitled to future benefits
might indicate the plan has a systemic issue with its administration.
The agency wrote that sponsor bankruptcies, mergers or
acquisitions might mean a higher risk of missing participants.
The DOL wrote that its preference during missing participant
investigations is to engage in a constructive dialogue with
plan fiduciaries and to seek voluntary compliance. It noted that
requested remedial measures could include plan fiduciaries: 1)
correcting their policies and practices regarding missing participants;
2) seeking a waiver of excise taxes from the IRS concerning
a TVP who failed to commence required minimum distributions
(RMDs); or 3) reimbursing a TVP for any such excise taxes.
Best Practice Guidance
The DOL-issued guidance regarding best practices may help plan
fiduciaries as they attempt to locate missing participants. We
expect the agency will rely on the tips supplied when conducting
missing participant investigations.
Within the guidance, the DOL said plan fiduciaries should
use practices that " will yield the best results in a cost-effective
manner for their plan's particular population. " Similarly, it said
that maintaining reliable data to ensure that participants do not
go missing is the cornerstone to ensuring a successful missing
participant program.
The DOL, importantly, reflected its view that plans should
reduce their policies and procedures to writing and document
key decisions and the steps taken to implement the policies. The
types of search processes it described as best practices include,
but are not limited to:
* Checking related plan and employer records for participant,
beneficiary and next of kin/emergency contact information;
* Checking with designated beneficiaries and the employee's
emergency contacts, in the employer's records, for updated
contact information;
* Using free online search engines, 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 a private delivery service with similar tracking
features, if less expensive;
* Attempting contact via other available means such as email
addresses, telephone and text numbers, and social media;
* Using death searches-e.g., Social Security Death Index-
if participants are nonresponsive over a period of time; and
* Reaching out to the colleagues of missing participants by,
e.g., contacting employees who worked in the same office.
As described, the new guidance provides helpful insight
into how the DOL views plan fiduciaries' obligations with
respect to missing participants. Some fiduciaries may find the
agency's best practice suggestions helpful in developing missing
participant search policies and procedures. Nevertheless, we
expect that investigators will point to this guidance in the future
to describe the DOL's position on the matter.
Steve Saxon is a partner with Groom Law Group, Chartered,
and George Sepsakos is a principal with Groom. Offices for
Groom are in Washington, D.C.
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