Retirement Benefits: Lost Now Found?
January 28, 2025 – Employers know that locating terminated vested participants and beneficiaries owed benefits under a retirement plan can be difficult, in part because people move and change jobs and will forget that they may have a balance or benefit owed to them under a prior employer’s plan. However, employers generally have an obligation under ERISA to try to locate missing participants and beneficiaries and make concerted efforts to get them their benefits.
Unfortunately, there has not been a centralized database or method for locating missing participants—until now. As part of the SECURE 2.0 Act of 2022, Congress tasked the DOL with the creation of a searchable, online database (“Database”) for lost retirement benefits. That Database has just recently ‘gone live.’ The Database is intended to allow individuals to search for the contact information of any retirement plan from which they may be owed benefits (either as a participant or beneficiary), and to allow the DOL access to retirement plan information in order to assist individuals in their search for lost retirement savings.
The Database’s creation was mandated by SECURE 2.0 Act, but participation in it by retirement plans is optional. Despite being optional, the DOL is encouraging plan administrators to submit information and promote the Database as a resource for individuals searching for lost retirement benefits.
Also in the last days of the Biden administration, the DOL also issued guidance which, together with the Database, may help plan fiduciaries manage small benefit amounts owed to participants and beneficiaries who cannot be located. In Field Assistance Bulletin (“FAB”) No. 2025-01 published last week, the DOL announced a temporary enforcement relief policy allowing plan fiduciaries to pay over small retirement benefit payments owed to missing participants or beneficiaries, to a state unclaimed property fund.
Under the FAB, the DOL will not pursue violations under ERISA section 404(a) in connection with the voluntary decision to transfer retirement benefit payments (including uncashed checks) owed to a missing participant or beneficiary from an ongoing retirement plan to a state unclaimed property fund, provided the present value of the participant’s or beneficiary’s nonforfeitable accrued benefit is $1,000 or less and the plan fiduciary complies with certain conditions, including the following:
- The plan fiduciary determines that the transfer to a state unclaimed property fund is a prudent destination for the participant’s or beneficiary’s retirement benefit payments;
- The plan fiduciary has implemented a prudent program to find missing participants consistent with the DOL’s Best Practices for Pension Plans published in 2021, and nevertheless has been unable to locate the participant or beneficiary;
- The plan fiduciary selects the state unclaimed property fund offered by the state of the last known address of the participant or beneficiary;
- The plan’s summary plan description explains that retirement benefit payments of missing participants or beneficiaries may be transferred to an eligible state fund and identifies the name, address, and phone number of a plan contact for further information concerning the eligible state funds to which the retirement benefit payments are transferred; and
- The state unclaimed property fund qualifies as an eligible state fund under the DOL’s policy.
This recent guidance is, in some ways, a departure from the DOL’s prior positions and guidance which indicated that the payment of retirement benefits to a state unclaimed property fund on behalf of a missing participant or beneficiary should be a last resort for fiduciaries. That said, the FAB maintains that the decision to pay lost benefits to a state’s unclaimed property fund is a fiduciary one, meaning employers must still act prudently when deciding whether to transfer benefits to the applicable state fund. Furthermore, although the FAB would relieve an employer from the DOL’s claim under section 404(a) of ERISA, it does not preclude participants/beneficiaries from pursuing violations of section 404(a), or the DOL from pursuing other ERISA violations.
For more information, please contact our ERISA / Employee Benefits Plans team or another Kullman attorney.