Missing participants and plan announcements: A refresher

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Publisher’s Note: This is the fourth in a four-part series of a recent ASPPA webinar by Kelsey Mayo, ASEA Director of Regulatory Policy and Partner at Poyner & Spruill LLP, in which she explains the basics of plan stops and terminations in the context of current conditions and regulations . Particular attention was paid to compliance in the discussion, as knowing the procedures for these functions can be helpful in avoiding errors, complications and even penalties. That first part is here; the second is here; the third is there.

Of course, it is best not to have any missing participants, Mayo said.

Missing participants are challenging for a variety of reasons, and a plan has certain commitments – as well as options – with respect to them. And that includes plans that are running out, Mayo emphasized.

In fact, tracking attendees is a fiduciary duty, Mayo warned. It is part of the responsibility to maintain a plan for the exclusive benefit of the participants and to behave as a prudent expert. “This includes making reasonable efforts to find participants or beneficiaries to make distributions,” she said.

And the DOL is serious, Mayo said, noting that its nationwide enforcement project continues. “Plan administrators should be diligent in their search,” she said. Additionally, she noted that the DOL has outlined best practices for trustees in the most recent guidelines and promulgated its enforcement guideline authorizing the use of the PBGC program for missing participants.

A termination plan must make arrangements to grant benefits to absent attendees, Mayo said. In the case of a defined benefit plan, this means working with an insurance company that provides pensions; for defined contribution plans, this means working with a private financial institution. Both can alternatively do this through the Pension Benefit Guaranty Corporation (PBGC) missing participant program.

Red flags

Mayo has identified a few red flags that could indicate missing attendees are becoming a problem:

  • more than a small number of missing / unresponsive participants;
  • more than a small number of dismissed persons entitled to vested benefits who have not received any benefits despite having reached the normal retirement date;
  • missing, inaccurate, or incomplete contact information, census data, or both;
  • Lack of solid guidelines and procedures for handling returned mail marked “Return to Sender”, “Wrong Address”, “Addressee Unknown” or otherwise undeliverable; and
  • lack of solid policies and procedures for dealing with uncashed checks; for example, the lack of an accounting journal / record of un cashed checks, a significant number of un cashed distribution checks used, or failure to reclaim un cashed check funds in distribution accounts.

Search for missing participants

Mayo offered some strategies for performing searches to find missing participants.

  • Review the associated plan and employer records for contact information and next of kin / emergency contact.
  • Inquire with the designated plan beneficiaries (e.g. spouse, children) and the employee’s emergency contacts.
  • Use free online search engines, public databases (real estate mortgages, tax and licensing organizations), obituaries, and social media.
  • Use a commercial search service, credit bureau, or proprietary internet search tool.
  • Try using USPS certified mail or a private delivery service with tracking capabilities.
  • Try other available means such as email addresses, phone numbers, and social media.
  • If contacts don’t respond for a period of time, try a death search.
  • Contact with colleagues of missing participants; For example, by contacting employees who have worked in the same office, or by posting a list of “missing” participants to current employees, or by communicating with other retirees who are already receiving benefits.
  • For union workers, use union communications to find missing retirees.
  • Register missing participants in public and private retirement registers with privacy and cybersecurity protection and publish the register through emails, newsletters and other communications to existing employees, union members and retirees.

Best practices to avoid missing participants

Mayo outlined several ways a plan can avert the problem and avoid missing participants in the first place.

Maintaining accurate census information. Mayo suggested that several steps can be taken to ensure that the census information about the employees is correct:

  • Contact attendees, current and retired, and beneficiaries regularly to confirm or update their contact information (i.e., addresses, phone numbers, social media contact information, next of kin / emergency contact information).
  • Include change requests for contact information in plan communication.
  • Mark undeliverable mail / email and unpaid checks for tracking.
  • Maintain and monitor the online platform for the plan that attendees can use to update contact information.
  • Provide prompts for attendees and beneficiaries to confirm contact information when they sign in to online sites.
  • Regularly request updates to the beneficiary’s contact information.
  • Conducting regular audits of census information and correcting data errors.
  • In the event of a merger, acquisition, or change of provider, address the submission of appropriate plan information (including participant and beneficiary contact information) and relevant employment records (next of kin, emergency contacts).

Use effective communication strategies. It is important to communicate effectively, not only with those who may be in contact with missing participants, but also with participants while they are still present, in order to avert potential problems. To do this, she suggested the following steps.

  • Use simple language and provide assistance in non-English.
  • Promote contact through the plan sponsor’s website and toll-free numbers.
  • Build steps with the employer and plan onboarding and registration processes for new employees as well as exit processes for the separation or retirement of employees.
  • Share information about how the plan can help eligible employees consolidate accounts from previous employer plans or rollover IRAs.
  • Clearly label envelopes and correspondence with the original plan or sponsor name for participants who split up prior to changing the plan or sponsor name.

Documentation of procedures and actions. Taking action to document procedures and actions can not only prevent problems, but it could also help a plan and sponsor learn from previous mistakes or omissions and avoid further problems. For example, Mayo suggested you can:

  • Reduce the plan’s policies and procedures to writing.
  • Document key decisions and steps and actions taken to implement policies.
  • Work with the planner to identify and correct deficiencies in the plan’s documentation and communication practice, including establishing procedures for obtaining relevant information in the employer’s possession.

Available upon request

The ASPPA webcast “Plan Freezes and Terminations” is available upon request. More information can be found here.


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