Public Agency Plan Administrators Need to Keep Track of Participants Before They Go “Missing”

By Jeff Chang

Although “governmental” plans are not subject to ERISA and the guidance issued by the U.S. Department of Labor (DOL), public agency plans in California are subject to ERISA-like rules and would benefit from following the DOL’s recent guidance on missing participants.

In its January, 2021 guidance, the DOL identified the following “red flags” as indicators of a missing participant problem:

  • More than a small number of missing or nonresponsive participants.
  • More than a small number of terminated vested participants who have reached normal retirement age but are not receiving their benefits.
  • Missing, inaccurate, or incomplete contact information or census data (e.g., mailing address, email, phone, Social Security number, birthdates, spousal information, etc.).
  • Lack of policies or procedures for handling returned mail or undeliverable email.
  • Lack of policies and procedure for handling uncashed checks.

If a review of your plan administration reveals a number of these red flags, you should adopt policies and procedures that:

  1. Help the plan maintain accurate and current participant information.
  2. Establish and encourage regular communication and contact with participants to make sure their data and information is kept up to date, especially after they terminate employment.
  3. Provide for appropriate searches for any participants who appear to be “missing.” In some cases, it may be reasonable and appropriate to charge the cost of the participant search to the affected account.
  4. Coordinate and work with the plan’s recordkeeper to take advantage of its technology, resources and participant access to stay “in touch” with your participants and to keep their information current.

If you don’t yet have the necessary policies and procedures, or would like assistance with the development of an appropriate strategy to deal with these problems, you should consult with employee benefits counsel.

The main takeaways from the DOL’s guidance are:

  • Figure out if you have a problem; and
  • If, like most plans, you do have one, do something about it.

Jeff Chang is a partner at Best Best & Krieger LLP. He has four decades of experience skillfully evaluating benefit and retirement plan compliance to achieve maximum outcomes for public agency clients throughout California. He can be reached at jeff.chang@bbklaw.com or (916) 329-3685.

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