Luckily, on January 12, 2021, the Department of Labor (DOL) announced additional guidance to help fiduciaries navigate this area. Specifically, the guidance is in the form of three publications, which we will provide more information on below:
The Best Practices for Pension Plans document outlines information that the DOL believes fiduciaries of retirement plans (both defined benefit and defined contribution plans) should consider to assist in the reduction of missing participants from their plans, ultimately to help ensure that plan participants receive the benefits that they are due when they reach retirement age.
The guidance focuses first on “red flags”- items that are noted as being warnings or indicators of a likely problem with missing or nonresponsive participants. It then goes on to detail best practices, which the DOL shares for plan fiduciaries to consider adding to their normal business practices, not just as temporary fixes. It should be noted that these best practices are not formal, binding guidance, but rather are offered as suggestions and considerations.
The second piece of guidance issued is Compliance Assistance Release 2021-01, which shares the investigative approach that will be used by the DOL when they conduct a Terminated Vested Participants Project (TVPP) audit. Within this guidance is a listing of errors that the DOL has indicated that they specifically look for during one of these audits, as well as the listing of documents that they likely would request of a plan as a part of one of these audits.
The final piece of guidance is Field Assistance Bulletin 2021-01, which temporarily authorizes fiduciaries of terminating defined contribution plans to use the PBGC missing participant program for the plan’s missing or unresponsive participant account balances.
In closing, the issue of missing and unresponsive participants in ERISA plans is far from a new one. Hopefully this guidance provides plan fiduciaries some insight into how the DOL is thinking about this issue, and offers some best practice suggestions that may be helpful for plans to consider putting in place.