Leaderboard

If I'm not mistaken I believe court cases have sided with participants, if they have proof they were in the plan, where the plan sponsor has not retained records to document the entitlement to and payment of benefits. I also think what DOL may view as a reasonable record retention and destruction policy would be much more stringent than what a plan sponsor or practitioner may consider. This is my non-legal practitioner memory from reading stuff over the years, and maybe my contextual memory is incorrect.

Each covered service provider is responsible for disclosing to the plan sponsor of any fees it receives from any source other than from the plan sponsor. If the broker account provider is receiving payments from the participants' accounts or from investments held in the participants' accounts, then the broker account provider is responsible for disclosing all such fees to the plan sponsor. If all of your fees are paid by the plan sponsor, then you have nothing to disclose. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/fact-sheets/final-regulation-service-provider-disclosures-under-408b2.pdf

There is no formal, explicit guidance so how these situations resolve is depends on the extant documentation and on the tenacity of the participant. We have the ability to retrieve plan accounting and tax reporting history for our clients extending back over 35 years. When these situations do come up - mostly when the Social Security Administration sends out the you-may-have-a-benefit letter - we can respond whether the individual was on a census file during the time period where we were the service provider. If yes, we can provide the last participant statement we prepared and the Form 1099R if that was within our scope of service. Still, having access to all of this history has not resolved situations where the individual terminated and was paid out before we became the service provider or where the individual joined the plan after we no longer were the service provider. Generally, when we have relevant information the matter is resolved quickly. If the matter is not resolved, the individual often considers the time and cost of continuing to pursue the matter. Relatively frequently, they may decide that they are gambling that the amount that may be recoverable may not be worth the effort. The DOL's focus on lost participants and their new charge to provide a resource to find missing participants seems to be trending towards a mandate that a Plan Administrator (as distinguished from service providers) should be able to inform any participant at any time the disposition of the participant's benefit. Given the evolution of technology, turnover of service providers, turnover of employer staff and a host of other factors, this will be a monumental challenge. This RFI regarding the DOL's new resource is out there with a June date for sending in responses. Perhaps plans could send the DOL a record that a participant in the plan EIN/PN was paid in full this amount on xx/xx/xxxx date and the plan is done with them. We could then refer these situations to the DOL. Just a thought.