DOL Guidance on Lost Retirement Plan Participants

The issue of what to do about lost or missing participants is a frustrating one for plan sponsors.

These participants often have terminated participation in a plan because they took a new job. They may have even moved. Because these terminated participants still have money in the plan or are entitled to benefits from it, the Department of Labor (DOL) has stressed that plan sponsors have a fiduciary duty to find them and ensure they receive plan communications and, eventually, their benefits.

DOL Guidance on Lost Retirement Plan Participants

But until this year, plan sponsors got minimal assistance from DOL to conduct this task. In early 2021, the agency issued some guidance for sponsors of both defined contribution (DC) and defined benefit (DB) plans in the form of three releases:

  1. Missing Participants—Best Practices for Pension Plans
  2. Compliance Assistance Release No. 2021-01, Terminated Vested Participants Project Defined Benefit Pension Plans
  3. Field Assistance Bulletin No. 2021-01, Temporary Enforcement Policy Regarding the Participation of Terminating Defined Contribution Plans in the PBGC Missing Participants Program

In the article “Lost Participants: DOL Provides Some Guidance” in the July issue of Benefits Magazine, Mary Komornicka, CEBS, ISCEBS-Fellow, reviews the guidance and offers some tips. Komornicka is an attorney with Larkin Hoffman Daly & Lindgren Ltd. in Minneapolis, Minnesota.

She explains that these releases are not formal regulations but instead are guideposts that can help a plan develop its own procedures to address this problem. Any DOL action would be based on the “facts and circumstances” unique to that plan, she adds.

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Here’s a look at Komornicka’s review of each document.

1. Missing ParticipantsBest Practices

This document identifies red flags that might indicate that a plan has a problem with missing participants. They include:

  • More than a “small number” of missing participants
  • More than a “small number” of terminated participants who have reached retirement age but have not yet started receiving benefits
  • Missing or inaccurate contact information for many terminated participants
  • Lack of procedures for handling returned mail
  • Lack of procedures for uncashed checks.

DOL identifies several best practices that fall into the following categories to address these problems.

  1. Maintain accurate census information.
  2. Implement effective communication strategies.
  3. Conduct missing participant searches.
  4. Document procedures and actions..

2. Compliance Assistance Release No. 2021-01

This document is intended to help DB plan sponsors comply with various fiduciary requirements regarding terminated participants, but many aspects also apply to DC plans. This guidance walks through the steps that DOL would take when addressing the issue of lost participants during an audit. The steps include:

Requesting documents. These include plan documents, census records, plan procedures for communicating with terminated participants and steps taken when there is a missing participant.

Looking for possible errors. DOL might look for systemic errors in recordkeeping and inadequate procedures regarding missing participants, communicating with participants nearing retirement or contacting the beneficiaries of deceased participants, and addressing uncashed distribution checks.

Working with plan fiduciaries to develop remedies for any possible fiduciary violations. Each resolution is often very fact-specific, Komornicka writes.

3. Field Assistance Bulletin No. 2021-01

This last piece addresses the specific problem facing terminating DC plans with missing participants.

PBGC in 2017 established a fiduciary safe harbor procedure that permitted a terminating plan to transfer the accounts of missing participants to PBGC. DOL has decided at this time that it will not pursue ERISA claims against a plan fiduciary should the fiduciary, acting in good faith, decide to transfer the account of missing participants to PBGC while in the process of terminating a plan. This may be an indication that DOL intends to reexamine the particular requirements of the safe harbor provisions, Komornicka writes. Or it may be an acknowledgment of the challenges of the COVID-19 emergency and the impact it has had relative to plan sponsors and service providers who have been operating remotely for several months. 

In any case, she explains, this policy means that if a plan that is terminating has some missing participants, a viable answer is to transfer those funds to PBGC. Under this approach, she cautions, fiduciaries must transfer the accounts of all plan participants that cannot be found; they cannot pick and choose. And there is no provision for an ongoing retirement plan to move the funds of a missing participant to PBGC. 


The guidance provided in these three releases is helpful to plan fiduciaries when dealing with the challenge of missing participants, but Komornicka reminds plan sponsors that these are not legal requirements but rather useful pointers.

 “Although there is more than one right way to address the fiduciary responsibilities surrounding lost participants, one clearly wrong way is to ignore the issue,” she concludes. “Plan sponsors should use this guidance from DOL to develop practices and ensure that they have properly addressed the issue. Service providers and auditors can assist with this process.”

Kathy Bergstrom, CEBS
Senior Editor, Publications at the International Foundation of Employee Benefit Plans

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