If you have ever found $10 in the pocket of a coat that you have not worn for some time, you are familiar with the delight of finding lost money that belongs to you. The Department of Labor’s new Retirement Savings Lost & Found Database (Database) seeks to recreate that feeling in the employee benefits realm by reuniting missing participants and beneficiaries with benefits they may have accrued under job-based retirement plans.
The importance of locating missing participants
Taking steps to find participants and beneficiaries who may be owed a benefit is important to companies that sponsor retirement plans for several reasons.
First, administrators of ERISA-covered retirement plans have a fiduciary duty to make a reasonable effort to locate retirement plan participants who may be eligible for a benefit. Both the Department of Labor and the Internal Revenue Service have issued guidance on steps that should be taken to locate missing participants. Many retirement plans have incorporated this guidance into “missing participant” procedures, which they follow when they are unable to locate a participant, or a participant has been unresponsive.
Second, there are practical administrative issues associated with missing participants. Retirement plans need to be able to contact participants to make timely payments of required minimum distributions (RMDs) and avoid any correction issues associated with failure to pay RMDs. In addition, there are administrative costs to a retirement plan associated with maintaining account balances or tracking accrued benefits for missing participants.
Third, missing participants remain a focus area for Department of Labor investigations and compliance efforts. The Department of Labor has even identified certain “red flags” that it views as warnings or indicators of a problem with missing or nonresponsive participants, such as incomplete contact information or census data.
SECURE 2.0 Act established the Retirement Savings Lost & Found Database
As part of the SECURE 2.0 Act of 2022, Congress ordered the Department of Labor to create the online searchable Database for lost retirement benefits by December 29, 2024. The purpose of the Database is two-fold: (1) to allow individuals to search for the contact information of any retirement plan from which they may be owed benefits (as either a participant or a beneficiary); and (2) to allow the Department of Labor to have access to retirement plan information to assist individuals with their searches for “lost” retirement savings. The Database is now live for retirement plans data submissions and individual searches.
The Lost & Found Database
While the creation of the Database was mandated by law, retirement plan participation is optional. Nonetheless, the Department of Labor is encouraging plan administrators to submit information and promote the Database as a key resource for individuals seeking any unpaid retirement benefits.
To participate in the Database information collection efforts, retirement plan administrators may submit names and Social Security numbers for individuals who are age 65 or older, have separated from service and may be owed a benefit from the plan. A plan fiduciary must first approve the sharing of participant information before it is submitted to the Database. Plans may authorize a recordkeeper or third-party administrator to submit the requested information to the Database.
For individuals who want to search the database for any benefits that may be owed to them, they must first register for a Database account. Registration requires individuals to provide their first and last name, date of birth, Social Security number, have access to a mobile device and a valid driver’s license to verify their identity.
It is too early to tell whether the Database will prove an effective tool in reuniting participants and beneficiaries with their job-based retirement savings. The outcome will largely depend on participation by both retirement plans and individuals.
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.
