Lost or missing plan participants? Here’s guidance from the Department of Labor

by | Feb 6, 2021 | Uncategorized

missing plan participants

Years after it was requested, the Department of Labor has issued guidelines on how plan sponsors can avoid issues with lost or missing plan participants.

Last month, January 2021, the department issued the guidance, including ways employers can track down missing or lost plan participants.

Industry groups have been asking for this kind of guidance for a long time, as the department has been investigating employers who have missing plan participants. However, the department had never issued any way to remediate the problem.

The guidance on missing plan participants is three-fold:

  1. It describes the best practices for retirement plans
  2. It has compliance assistance release
  3. It has a field assistance bulletin which outlines how plan sponsors can use the missing participant program

For plan sponsors with missing or lost participants, here’s the breakdown. If you are a plan provider, the first thing you need to do is find out if you have missing or lost plan participants. The guidance includes ways for employers to track or find missing or lost participants, like regularly contacting them and asking them to update contact information.

Also, the department says employers should speak in simple, plain language about benefit plans, sharing details and rules about the plan – including when the employee leaves the company (voluntarily or involuntarily!).

If lost or missing participant can’t be found, the department has a list of free and paid search options.

So, what is the big deal about missing or lost participants? Sometimes, these workers don’t remember or understand that they were enrolled in a retirement savings plan and if they have been at a job for a long enough time, they might have earned enough to keep their assets in the plan – not automatically cashing it out.

This means millions in assets are going unclaimed.

It can also mean that employers won’t be subject to DOL investigations.

So, the guidelines are there. Plan sponsors would be wise to follow them.

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