The DOL’s EBSA has a number of programs that can restore benefits to plans and participants. Those include:

• Civil investigations.
• Criminal investigations.
• Informal compliant resolutions.
• Correction programs.

Civil investigations is the program that most concerns plan sponsors; however, criminal investigations are the most dramatic and can most severely impact the lives of “bad actors.” Last year the EBSA’s criminal investigation resulted in 161 guilty pleas or convictions. The bad acts go far beyond any mistakes that plan sponsors or fiduciaries could reasonably make. Think in terms of embezzlement and theft.

With regard to civil investigations, the EBSA closed 514 investigations “with results,” meaning a recovery or correction of some kind. While 514 investigations does not seem like many (out of approximately 800,000 ERISA-governed retirement plans and 2.6 million health plans), the resulting recovery of almost $750 million in benefits was undoubtedly impactful on the lives of many American workers and retirees.

Also, I suspect that most plan sponsors are trying to do the right thing and that the bad actors, either civilly or criminally, are few and far between. That suspicion is at least partially confirmed by the voluntary correction applications filed with the EBSA–1,037 VFCP (Voluntary Fiduciary Correction Program) applications and 20,009 DFVCP (Delinquent Filer Voluntary Compliance Program) filings. This volume of filings suggests a generally compliant culture where inadvertent mistakes were made.

In addition to those programs, the EBSA has an Informal Compliant Resolution program. The most common experience for that program is where a participant contacts one of the EBSA’s Regional Offices with a complaint about benefits that the participant believes are due. In many cases, it is simply a misunderstanding, but where the complaint appears to have merit, the Regional Office will contact the plan sponsor to better understand the matter and, if appropriate, to resolve the conflict.

Last year, the Informal Complaint Resolutions program handled 199,094 inquiries from participants and beneficiaries and recovered $544.1 million in benefits.

Returning our focus to the Civil Investigation program, in the past year it recovered $741.9 million in benefits. Of that, $432.6 was recovered under the “terminated vested participant benefit” investigations…think “missing participants.”

That leads to the key point of this article. The EBSA is actively  investigating plan sponsors and fiduciaries for their handling of missing participants. But before discussing that, you might ask “What is a missing participant?”

The answer is more complicated than the question. A good definition is that it is a former employee who left the employment of a plan sponsor, but left his or her benefits in the plan. If plan communications (e.g., emails, mail, disclosures) are sent to a participant and at least apparently received, the former employee is not “missing.” But, if the emails and mailings are kicked back as undeliverable, the participant is missing.

While most plan sponsors and fiduciaries might think that participants have a duty to keep the plan and the employer up to date on their contact information, the EBSA has a different point of view. Participants, including  missing participants, are entitled to receive certain disclosures (for example, quarterly 401(k) statements and annual 404a-5 investment charts). If those aren’t being delivered (e.g., received by the former employee), then the EBSA’s position is that fiduciaries need to take reasonable and prudent steps to find the participants. If the EBSA investigates the plan, and if the fiduciaries have not taken reasonable and prudent steps to keep locate missing participants, the EBSA will assert that the plan fiduciaries (e.g., committee members) have breached their fiduciary duties. As you might imagine, that comes as a shock to committee members  and it is inevitable that they will ask why no one told them about these responsibilities.

To help educate committee members on their responsibilities and how to satisfy the DOL’s view of those responsibilities for the missing participant issue, the EBSA has issued these best practice guidelines: best-practices-for-pension-plans.pdf

It would be helpful to review that guidance at an upcoming meeting with plan fiduciaries.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

The views expressed in this article are the views of Fred Reish, and do not necessarily reflect the views of Faegre Drinker.