Just Because I’m Missing, Doesn’t Mean I’m Lost: Should Plan Sponsors Provide Data for the DOL’s Missing Participant Database?

by Brenda Berg

“Missing participants” have long been a thorn in the side of plan sponsors and administrators, as they are owed a retirement benefit, but are unable to be found or unresponsive to plan communications. As a partial solution, Congress directed the DOL in the SECURE 2.0 Act of 2022 to create a “Retirement Savings Lost and Found”—an online searchable database that would connect missing participants with their retirement benefits—by December 29, 2024. The DOL had contemplated populating the database with information from Form 8955-SSA, which plans already submit to the IRS. However,  the IRS has refused to provide the information to the DOL, citing privacy concerns regarding confidential tax information. This has caused the DOL to look to sponsors of ERISA plans to voluntarily provide participant information to populate the database. While this may be a good idea in principle, it creates many obstacles.

On April 15, 2024, the DOL released a proposed information collection request for the Retirement Savings Lost and Found and requested comments on the proposal. The request asks plans to voluntarily provide information to populate the database by submitting the requested information along with the plan’s 2023 Form 5500 filing. Although one might think a missing participant database would only ask for information about truly missing participants, that is not the case: the database would also include information about participants who were previously reported as vested terminated participants—even if they later received distributions (so they are not missing!). In addition, the database would include information about participants who were cashed out under involuntary small benefit cash-out provisions, plus those with benefits that were distributed to an annuity company in an annuity purchase.

The requested information is voluminous and includes the following for each participant or beneficiary: name, date of birth, mailing address, email address, telephone number, social security number, form and amount of benefit, and, if a distribution was made, the date and amount of distribution. For small benefit cash-outs or annuity purchases, the plan must provide the information about the financial institution and contract. Finally, the plan sponsor must provide a history of the plan itself, including any plan name changes and plan sponsor changes that have occurred over the years, as well as plan merger and transferor plan information.

The DOL is asking for this information since the inception of the plan! While this database could be helpful to both participants and plan sponsors, the DOL’s request would likely be a significant new burden on plans. The DOL proposal states that it does not impose any new recordkeeping requirements, and “the Department expects plans that follow best practices will already have much of this information on file.” However, having information on file or in the plan records somewhere does not necessarily mean this will be easy, especially regarding benefits that were already paid. Gathering and organizing the information will be especially difficult in situations where there have been plan sponsor changes, plan mergers, and recordkeeper changes.

Moreover, plan sponsors, administrators, and recordkeepers may also be concerned about the privacy implications of providing this detailed information to the DOL for its database—especially since provision of data is currently voluntary, and there is not a legal requirement to do so. Although the DOL data request assures that “multiple security measures will be in place to protect plan participant and beneficiary data” and further that a public user will have no access to “sensitive data,” it is troubling that the DOL is not currently proposing a safe harbor that would protect fiduciaries from liability for providing the information.

Comments on the DOL’s proposal are due June 17, 2024, though it’s possible the proposal will be modified; the timing may make it unlikely for the final parameters to be established before the Form 5500 due date which is the current mechanism for providing information. In any case, plans can view this as a reminder to dust off their missing participant search procedures, working with their employee benefits counsel and recordkeepers. Plans may also want to consider ways to gather the requested information, as it is possible the DOL will make this “request” mandatory in the future.