This article originally ran on September 12, 2014.
By Linda Segal Blinn, J.D.
Letter-forwarding services are so 20th century. At least, that is the conclusion of the Department of Labor (DOL) in recent guidance designed to assist plan fiduciaries in locating missing participants and beneficiaries in terminated defined contribution plans.
On Aug. 14, 2014, the DOL issued Field Assistance Bulletin (FAB) 2014-01
, which replaces FAB 2004-02
, regarding the steps that a plan fiduciary should take to locate missing plan participants in a terminated defined contribution plan. FAB 2014-01 reflects both technological advances and changes to available federal agency missing participant locator services that a plan fiduciary can utilize to locate missing individuals. While this DOL guidance applies to defined contribution plans subject to ERISA, non-ERISA plans may also consider looking to FAB 2014-01 as a best practice.
FAB 2014-01 was prompted in part by the ERISA Advisory Committee’s 2013 report “Locating Lost and Missing Participants.” Additional factors triggering an update to the 2004 guidance included:
- the end of the IRS and the Social Security Administration providing letter forwarding services on behalf of plans seeking to locate an individual; and
- increased access to Internet searches, due to expanded and improved technological advancements. In its November 2013 report to DOL Secretary Perez, the ERISA Advisory Council recommended the use of “search options other than governmental locator programs (e.g., cost effective commercial locator services and other search vehicles)” as “appropriate under ERISA and should be accorded safe harbor status under ERISA, with a menu of approaches being acceptable.”
FAB 2014-01 provides that in order for a fiduciary of a terminated defined contribution plan to fulfill the duties of prudence and loyalty, the fiduciary must use the following search methods in locating unresponsive participants:
- Use Certified Mail.
- Check Related Plan and Employer Records. Plan fiduciaries must ask both the employer and administrator(s) of related plans to search their records for a more current address for the missing participant.
- Check with Designated Plan Beneficiary. In searching the terminated plan’s records or the records of related plans, plan fiduciaries must try to identify and contact any individual that the missing participant has designated as a beneficiary to find updated contact information for the missing participant.
- Use Free Electronic Search Tools. Plan fiduciaries must make reasonable use of Internet search tools that do not charge a fee to search for a missing participant or beneficiary. Online services noted include Internet search engines, public record databases (such as those for licenses, mortgages and real estate taxes), obituaries and social media.
In keeping with the recommendation of the ERISA Advisory Council, the required search steps listed in FAB 2014-01 now include the reasonable use of free Internet search tools to locate a missing individual. Under the 2004 FAB, using the Internet had been a search option that the plan fiduciary might consider, after exhausting the other search steps required by the DOL.
As was the case in the 2004 guidance, FAB 2014-01 notes that the fiduciary duties of prudence and loyalty may require a plan fiduciary to consider whether additional search options should be undertaken. Considerations may include the size of a participant’s account balance and the cost of further search efforts. Useful tools identified are the use of Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases and analogous services that may involve charges.
However, recognizing that there may be costs associated with such efforts, FAB 2014-01 notes that whether such additional steps are warranted should be determined on a case-by-case basis. “A plan fiduciary should consider the size of a participant’s account balance and the cost of further search efforts in deciding if any additional search steps are appropriate. As a result, the specific additional steps that a plan fiduciary takes to locate a missing participant may vary depending on the facts and circumstances.”
Linda Segal Blinn, J.D., is vice president of Technical Services for Tax-Exempt Markets at Voya Financial.