ERIC Calls Foul in DOL’s Missing Participant Push

In an open letter asking for more detailed guidance, the ERISA Industry Committee spells out what it says are “examples of missteps” by the DOL, including “issuing letters asserting breaches of fiduciary duty when there is no applicable legal guidance.”

The ERISA Industry Committee (ERIC) this week sent a detailed comment letter to Assistant Secretary of Labor Preston Rutledge, encouraging the Department of Labor (DOL) to develop more guidance related to the challenge of employers locating missing retirement plan participants.

With its openly published comments, ERIC joins the Plan Sponsor Council of America and other advocacy groups to urge DOL to act quickly on this challenging topic.

The ERIC letter asks that until guidance is provided, for the DOL to stop issuing letters that allege an employer has committed a breach of fiduciary duty with respect to the practices utilized to locate missing retirement plan participants.

“Employers engage in a multitude of search practices to locate so-called ‘missing’ participants without official guidance from federal agencies on the exact processes they should utilize,” the ERIC letter states. “Moreover, employers are subject to federal audits of these search practices. Official guidance is needed in providing greater certainty to employers in the operation of their retirement plan and in supporting their ability to locate former employees.”

In its letter, ERIC spells out what it says are “examples of missteps” by the DOL. These include “issuing letters asserting breaches of fiduciary duty when there is no applicable legal guidance; assuming that every missing participant can be found; and assuming that if a missing or recalcitrant participant responds to a DOL mailing (and corrects a missing address or commences payment), then the plan’s previous search and communication efforts must have been faulty.

The letter further questions DOL investigators for “taking legal positions that are contrary to long-settled fiduciary standards, including telling ERIC members that ERISA’s fiduciary duties require ‘whatever it takes’ to put participants into pay status and to locate missing participants.”

According to ERIC, the DOL is not honoring the legal interpretations of other agencies, “and in particular, Internal Revenue Service (IRS) interpretations that are binding on the DOL.”

“ERIC encourages the DOL and the other agencies to be consistent in their guidance and that the DOL guidance, specifically, be consistent with long settled fiduciary principles,” ERIC writes. “Such guidance will provide plan administrators with a roadmap that they are certain to follow going forward and will provide DOL investigators with appropriate guidelines on the applicable legal standards and factual assumptions.”