PLANSPONSOR - October 2017 - 28

Retaining Post-Employment Assets
Does your plan have a policy for retaining retiree/terminated assets?
55.6%
61.3%
56.6%
49.4%
2010
2011
2012
Source: Callan, 2017 Defined Contribution Trends Survey
practices, or lack of practices, " sponsors use to find missing
participants, Friedland says. " The critical piece for sponsors to
know is the DOL is not necessarily looking for results, in terms
of a sponsor's success rate in finding missing participants, " he
explains. " What the DOL is investigating is the procedures that
plan sponsors have in place to locate these missing participants,
and whether those procedures actually have been followed. The
DOL wants to know: What have you done to search out the individuals? "
So
far, the agency has focused its
investigation on DB plans. " But that
activity has served as a wake-up call to
the wider plan sponsor community and
the third-party administrator [TPA]
community, to understand that this is
an issue they need to pay attention to, "
Friedland says.
Most DC plan sponsors likely have
neglected this issue, says Brian Donohue,
a partner at October Three Consulting LLC
in Chicago. " A big issue ahead for DC plans
is when their participants reach age 70 1/2:
Now they have to start taking money out,
and the IRS wants its taxable income, " he
says. " These plans have only been around
since the early 1980s, so there may not be
that many people with DC accounts who
have crossed the 70 1/2 threshold. But it
could add up to a lot of people in the years
ahead. " The DOL, consequently, may take
an interest in sponsors' processes to locate
these participants.
In the meantime-as soon as
2018-the Pension Benefit Guaranty
Corporation (PBGC) may start making
it easier to help reunite participants with
their balances at previous employers that
terminate a 401(k) plan. Last September,
the PBGC proposed expanding its
missing participants program beyond pension plans, to also
cover those in terminated 401(k) plans. Terminated 401(k)s could
transfer benefits to the PBGC, which would hold the money and
periodically search for the missing participant. " This is still just
a proposal, but it looks like the PBGC envisions itself taking on
the role of a clearinghouse, " Donohue says. " In the future, transfers
to [that organization] might even be required. But, for now, it
would just be optional. " -Judy Ward
2013
2014
59.1%
43.5%
2015
48.7%
2016
The New Fiduciary Rules' Impact
WILL the Department of Labor (DOL)'s new fiduciary rule actually have much
impact on rollovers? With the delayed implementation of many aspects of the
new rule, only time will tell.
" The June 9 initial implementation date did make any advice related to plan rollovers
a fiduciary action, " says Will Hansen of the ERISA [Employee Retirement
Income Security Act] Industry Committee (ERIC). " But I think the writing is on
the wall, that [the Trump administration] eventually will kill the new fiduciary
rules altogether. I think they're just buying time to do that in a proper way. " If
the new rules stand, Hansen says, sponsors need more rollover-related details.
" We need more guidance on how plan sponsors should properly monitor their
recordkeeper, if it's providing advice on plan rollovers, " he says.
Plan sponsors are just beginning to look at what they need to do to monitor their
recordkeeper's rollover actions as affecting their participants, Callan Associates'
Lori Lucas says. " They are starting to ask, 'What reporting on rollovers should
we be requesting from our recordkeeper, and what rollover statistics should we
be getting on an annual basis, or even more often?' " she says.
Some recordkeepers have decided to take an active role on rollovers, while others
have not, Lucas says. " We're seeing a wide range of responses by recordkeepers
to the fiduciary rules on rollovers, " she says. The reporting capabilities of recordkeepers
on their own rollover activities also vary widely, she says. " To some
extent, recordkeepers are still working on what type of reporting they are going
to provide, " she notes. " In some cases, the reporting is very simplistic. But in
other cases, it is very robust. " -JW
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