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The payment of benefits to missing participants and beneficiaries has been an area of increased DOL attention in recent years.1  Yet despite the DOL’s heightened enforcement activity, it has yet to publish guidance addressing how fiduciaries of ongoing plans can satisfy their fiduciary duty to locate missing individuals.  Failure to timely pay benefits may also impact a plan’s qualification under the tax code.

In the absence of clear direction, plan sponsors of ongoing plans are relying on analogous DOL guidance for terminating plans, which provides several search steps fiduciaries should undertake when looking for missing individuals.  In addition, the IRS recently issued a field directive to its exam agents instructing them not to challenge a plan’s qualified status for failure to pay required minimum distributions to missing individuals if the plan has taken certain search steps.  While the DOL and IRS guidance differs slightly, taken together they suggest the following steps:

  • Send a certified letter to the last known address;
  • Attempt to contact through phone/e-mail;
  • Check related plan and employer records;
  • Contact designated beneficiaries of the plan and related plans;
  • Perform free internet searches; and
  • Use a commercial locator service.2

Even where the above steps are utilized, the DOL may nonetheless require additional search methods, as reported by the American Benefits Council.3  It’s also uncertain how frequently and when a search must first commence (for example—whether searches should start at normal retirement age or when any mail is returned, regardless of the participant’s age or status).  Given these uncertainties, various industry groups have written to the DOL asking it to issue direct guidance for ongoing plans.4  In response, it has been reported that the DOL is aware of the issue and intends to publish subregulatory guidance.

In the meantime, plans should continue to apply the limited DOL and IRS guidance when searching for missing individuals, being mindful of HIPAA and other privacy considerations, as well as general fiduciary duties.  Searches should also be well-documented in an individual’s file, including proof of mailings.

Not intended as legal advice.

  1. In 2019, the Employee Benefits Security Administration (a DOL agency) recovered over $2 billion in payments to plans, participants, and beneficiaries from enforcement actions.
  2. Under the DOL’s guidance in Field Assistance Bulletin 2014-01, a fiduciary should consider their duties of prudence and loyalty before undertaking this step, considering the size of a participant’s account balance and the cost of further search efforts.
  3. For instance, DOL examiners told American Benefits Council members that they must use different search methods each year, contact current and former employees who worked at the same time as the missing participant, and generally “do whatever it takes” to locate them.
  4. In addition to the American Benefits Council, the ERISA Industry Committee (ERIC) and the Plan Sponsor Council of America have sent letters to the DOL.