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Northwest OH Legal Blog

Wednesday, October 1, 2014

United States Department of Labor Issues Updated Guidance on Fiduciary Duty to Locate Missing Participants

One of the perennial problems that plan administrators of defined contribution plans face is the disposition of accounts being held for participants who are owed benefits but cannot be located (referred to as “missing participants”).  On August 14, 2014, the United States Department of Labor (“DOL”) issued updated guidance regarding a fiduciary’s duty to locate missing participants and beneficiaries when making distributions from terminated defined contribution plans. The new DOL guidance was prompted by the termination of well-established letter-forwarding programs that had been developed and used for many years by the Internal Revenue Service and the Social Security Administration to locate missing participants.  Although the new DOL guidance is aimed at terminated defined contribution plans, the guidance has relevance to non-terminated defined contribution and defined benefit plans that are faced with the problem of finding missing participants.

Searching for Missing Participants.  According to the DOL guidance, a fiduciary must make a reasonable effort to locate missing participants so that the fiduciary can implement directions from the participant or beneficiary regarding plan distributions.  Reasonable expenses incurred in the search may be charged to missing participants’ accounts.

The guidance provides four search methods that the fiduciary is required to use to find a missing participant.  Other methods may be required if the missing participant’s account balance is large enough to warrant additional expense.  The required search methods are:

1.         Use Certified Mail.  The fiduciary should send a notice to the participant’s last known address using certified mail.  The DOL has previously provided a model notice that can be used for such a mailing.  Other forms of notice can also be used.

2.     Check Related Plan, Fund Office, and Employer Records.  It is possible that more up-to-date contact information about a missing participant’s whereabouts is available through other sources, including the fund office for a Taft-Hartley plan, the participant’s former employer, or the administrator of a related plan.  The fiduciary should request that the fund office, the former employer, or the administrator, as applicable, search its records for a more current address for the participant.  According to the DOL, if there are privacy concerns, the fiduciary engaged in the search may request that the source contact the missing participant, or forward a letter to the participant, on the plan’s behalf.

3.         Check with Designated Plan Beneficiary. The third method is for the fiduciary to try to identify and contact any individual that the missing participant has designated as a beneficiary (e.g., spouse, children, etc.) to find updated contact information for the missing participant.  Again, if there are privacy concerns, the fiduciary may request that the designated beneficiary contact the missing participant, or forward a letter to the participant, on the plan’s behalf.

4.   Use Free Electronic Search Tools.  A fiduciary must make reasonable use of Internet search tools that do not charge a fee to search for locating a missing participant.  Such online services include Internet search engines, public record databases (such as those for licenses, mortgages and real estate taxes), obituaries, and social media.

If these four search methods are not successful in locating the missing participant, the fiduciary must consider the use of additional search methods, including Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and other services that may involve charges.  Whether to use additional search methods is a fiduciary decision that should take into account the size of the benefit and the amount of the additional expense.  All decisions made the plan administrator to locate participants whose whereabouts are unknown and distribute their accounts should be recorded in written or electronic form so that the plan administrator can demonstrate to the DOL’s satisfaction that it has satisfied its fiduciary duty to locate the missing participants.  The DOL guidance underscores that such decisions are fiduciary decisions and not merely administrative decisions.

Key Takeaways.  Although the new DOL guidance regarding missing participants is intended for use by fiduciaries of terminated defined contribution plans, the guidance can be equally useful to the administrators of non-terminated defined contribution and defined benefit plans.  Plan fiduciaries now have an obligation to use the DOL’s four required steps to locate missing participants.  A fiduciary’s decision to follow these steps and, if warranted, use additional search methods is a matter of fiduciary duty, and not merely an administrative decision.

If you have any questions or concerns regarding this communication, please do not hesitate to call Allotta | Farley Co., L.P.A. at (419) 535-0075 or email megarner@allottafarley.com.


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With offices in Toledo and Lima, OH Allotta Farley Co., L.P.A. serves clients throughout northwest OH with various legal matters. Areas of service include Allen County, Ashland County, Auglaize County, Crawford County, Defiance County, Erie County, Fulton County, Hancock County, Hardin County, Henry County, Huron County, Lucas County, Marion County, Mercer County, Morrow County, Ottawa County, Paulding County, Putnam County, Richland County, Sandusky County, Seneca County, Van Wert County, Williams County, Wood County, Wyandot County.

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