RCH Updates Missing Participant Policy Template

A business is offering defined contribution plan sponsors new guiding principles to help them fulfill their fiduciary duty to locate missing participants.

The Retirement Clearinghouse LLC, a provider of portability and consolidation services for DC plans, published this month an updated missing participant policy template that reflects the Department of Labor’s increased focus on documentation, process integrity and proactive oversight as it oversees sponsors’ attempts to locate individuals who have become disconnected from their retirement savings accounts over time.

The template includes the following three updates to a template that RCH released in 2024:

• “Greater emphasis on fiduciary process and decisionmaking;
• Expanded preventive controls to reduce missing participants; and
• Improved documentation to support audit and enforcement readiness.”

The DOL announced in January that it would reduce its focus on enforcing rules governing how plans meet their fiduciary obligations to missing participants, citing the functionality of the Employee Benefits Security Administration’s Retirement Savings Lost and Found database. However, industry experts have warned that plan sponsors should not reduce their efforts to find missing participants or their beneficiaries despite the DOL’s more relaxed enforcement stance.

Key Recommendations

The new principles outlined by RCH urge plan sponsors to first provide an introduction outlining the purpose of the plan’s policy, as well as a definition of missing participants. The definition can include examples of parties that may count as missing participants, such as beneficiaries of deceased participants and participants who have reached normal retirement age or are otherwise entitled to a distribution.

In a section of its template, RCH offered “Procedures to Minimize Missing Participants,” outlining ways the plan administrator can seek to minimize the incidence of missing participants, such as through:

• Periodic mailings that request participants inform the plan of any changes in contact information;
• Educating participants about the importance of keeping contact information updated;
• Regularly auditing [plan] census data for errors and correcting deficiencies; and
• Flagging returned email, mail and uncashed distribution checks as items for additional follow-up.

The RCH template also suggested that plan sponsors define and document the search procedures they use, including, for example: internal records review, beneficiary and emergency contact outreach, public record searches, and commercial search provider services.

A sample “Documentation” section stated that a plan administrator should record the dates and methods used for search attempts, the results of each attempt, any communication sent to the participant and key decisions made in connection with a given search, including the rationale for selecting or forgoing particular search methods.

Prior Recommendations

In 2021, EBSA issued guidance to help retirement plan fiduciaries meet their obligations under Title I of the Employee Retirement Income Security Act to locate or distribute retirement benefits to missing or nonresponsive participants. In the guidance, the DOL indicated that plan sponsors should take the following steps to deal with the issue:

• Maintain accurate census information;
• Implement effective communication strategies;
• Conduct missing participant searches; and
• Document procedures and actions.

RCH also previously recommended three best practices for plan sponsors based on whether a participant is ahead, nearing or past a distribution event:

• Conduct a low-cost, automated, yearly search if a participant is well in advance of a normal distribution event;
• Perform an automated search, along with outreach to the participant and verification of their address, if a participant is nearing a normal distribution event; and
• Intensify the search to a “forensic” one—utilizing a search specialist and additional search tools—if the distribution event already occurred.