The Department of Labor’s ERISA Advisory Council intends to recommend that the department update current guidance related to locating lost or missing retirement plan participants, based on teleconference discussions held by the panel Sept. 23.
The council intends to suggest that the DOL update FieldAssistance Bulletin 2004-02 to clarify that it applies to locating missing plan beneficiaries, and not just plan participants, in terminated defined contribution plans. The council would also like the DOL to specify plan fiduciary obligations of plan sponsors in attempting to locate missing and nonresponsive plan participants in active and frozen defined contribution plans.
The council also intends to recommend to the DOL that a plan sponsor that has met its fiduciary obligations to contact a plan participant be allowed to treat that individual as a lost participant or beneficiary after a specified period in which the individual fails to cash a retirement benefit check. In that situation, the council intends to recommend, the plan should be allowed to return the distributed amount of the uncashed check to the plan’s forfeiture account and determine whether benefits, without earnings, will be restored if or when the participant or beneficiary claims the benefit.
Locating lost and missing plan participants was one of three issues on which the council heard testimony this year. In addition to that issue, the council has also examined the issues of private-sector pension plan de-risking and successful retirement plan communications for various population segments. The council meets several times a year to discuss selected topics and make recommendations with regard to those issues to the labor secretary.
The council plans to hold an open meeting Nov. 4-5 to finalize its recommendations.
On the topic of pension de-risking, the council is expected to suggest that the DOL confirm that Interpretive Bulletin 95-1, which establishes fiduciary standards for the selection of an annuity provider with respect to defined benefit plan benefits, applies also to annuity purchases that are not in connection with a plan termination. The DOL should also consider creating additional safe harbors for plan sponsors making such purchases, including requirements for notice and valuation procedures similar to those required if offered under the plan regarding lump-sum options, the council said.
The council also expects to recommend that the DOL should consider providing guidance under ERISA Section 502(a)(9) to clarify for plan fiduciaries the consequences of a breach of fiduciary duty in connection with the purchase of an annuity contract from an insurer for the distribution of benefits under the plan.
The council is also expected to suggest that the DOL refer the council’s final recommendations to the Internal Revenue Service so that the IRS may consider whether to issue guidance on the potential tax implications for the plan and/or the participant of the choice of a lump-sum distribution if the participant is in pay status.