Missing and nonresponsive participants are a liability for any retirement plan. Undelivered notices, uncashed checks, and unreturned election forms all create compliance issues and additional administrative expenses. Unfortunately, a participant’s “radio silence” gives the plan no relief from the obligation to keep accurate records and take appropriate steps to ensure that the participants and beneficiaries are paid their full benefits when due.
Fortunately, the DOL has some reader friendly advice for plan administrators in an article called Missing Participants – Best Practices for Pension Plans, published January 12, 2021. Here are the highlights:
Find out if you have a missing participant problem.
Review plan accounts and look for the following red flags:
- More than a small number* of missing or non-responsive participants
- More than a small number of terminated vested participants who have reached normal retirement age but have not started receiving their benefits
- Missing, inaccurate, or incomplete contact information, census data or both
- An absence of sound policies and procedures for handling returned mail and uncashed checks
*Note that what a “small number” may be is not defined in the article.
Keep participant data current. The DOL identifies several successful strategies:
- Update the data early and often – Reach out regularly to all participants, to maintain complete information and to flag missing participants for follow-up as soon as possible.
- Get participants to help out – In every “touch” with a participant, request updated contact info, and make it easy for them to provide it.
- Don’t lose info in a plan transition – Contact details may get lost when you change record keepers or merge with another plan, so add this task to your transition to-do list.
- Show your work! – as in most fiduciary compliance efforts, documentation is key. In a DOL investigation, how would you show your efforts to keep data updated?
Make these best practices the rule, not the exception, in your plan administration.
A plan is not permitted to ignore missing participants and their beneficiaries. With this advice now published, we can expect the DOL to lean into its investigations of plans that present the above missing participant red flags. Therefore, it is worthwhile implementing in your retirement plan an ongoing culture of maintaining contact with participants, compared with the less effective quick fixes that may be attempted only sporadically. Make these best practices the rule, not the exception, in your plan administration.