The DOL estimates that tens of thousands of participants lose track of an estimated $850 million in 401(k), 403(b), 457 and other defined contribution assets each year. (Photo: Shutterstock)
The Department of Labor is asking Congress for $5 million and 22 full-time employees in its 2024 budget to establish a dedicated program to ensure that missing retirement plan participants receive their benefits. The budget request outlines investigative efforts to be led by the Employee Benefits Security Administration (EBSA) aimed at improving economic equity and allowing the agency to focus on vulnerable missing participants.
In fiscal year 2021, EBSA recovered more than $1.5 billion in lost benefits for more than 16,000 missing participants, which equals about $221,000 per investigator per day, according to the funding request. The agency's enforcement and compliance assistance programs help retired elderly workers and their beneficiaries after their plans have lost track of them or were unable to contact them.
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"Many people were living on very limited incomes without even knowing they had substantial retirement benefits available," according to the proposal. "These efforts to find missing participants enhanced the quality of life for many elderly people who were living at the financial margins."
EBSA also plans to increase its focus on industries with a higher concentration of foreign-born workers to see if they have a higher incidence of missing participants. The effort will include looking for factors that may present obstacles to those employees receiving benefits due to them.
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Without additional funding, EBSA said it will need to reduce and limit its current efforts to serve missing participants and diminish the positive return on investment that the program generates for taxpayers.
Based on its experience working with a wide spectrum of plans EBSA developed several best practices for employers to minimize and mitigate the problem of missing or nonresponsive participants. These include:
- Maintaining accurate census information for the plan's participant population through periodic contact with current and retired beneficiaries, including contact information change requests in plan communications, and flagging undeliverable mail and email as well as uncashed checks for further investigation.
- Implementing effective communication strategies that use easy-to-understand language and offering non-English language assistance where appropriate, providing information about how the plan can help eligible employees consolidate accounts from previous employers, and making sure any changes in plan and sponsor name changes are clearly articulated.
- Searching for missing participants by checking with beneficiaries on file, conducting searches of public online databases, and registering missing participants in public and private pension registries.
- Documenting actions taken to locate missing participants in writing and ensuring record keepers' processes and practices are adequate.
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM's Retirement Advisor magazine and LifeHealthPro online channel. compensation topics.
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