Retirement Plan Vendor Requesting Information on All Employees

[waid10]

Hi. Our school division uses Lincoln as the vendor for our 403(b) Plan. Lincoln has recently asked us to provide names, addresses, dates of birth, SS#s for all employees of the school division. Obviously, this is information Lincoln will have and need for those employees that have already elected to participate in the 403(b). But Lincoln is also asking for this information to be provided regarding employees that are not participants for purposes of education and marketing to them the benefits of participating in the 403(b) plan.

Are we permitted to share this information with Lincoln?

Thanks.

[K2retire]

It is routine for vendors who administer 401(k) plans to require such information. I'm not as familiar with 403(b) plans. If Lincoln is preparing the 5500, they need to know about all employees in order to determine if the plan is required to have an independent audit.

Is their education and marketing intended to assist the employer in meeting the universal availability rules?

[waid10]

Thank you K2retire. I agree that some of what is being requested pertains to compliance requirements. But when I dug a little deeper with Lincoln, this is the email the rep responded to me with:

When a plan sponsor hires a service provider to provide record keeping,
plan compliance and investment fund services for the plan, the service
provider is an agent of the plan sponsor. As an agent, we represent the
plan sponsor for the various plan duties that are delegated to the service
provider. As such, Lincoln is required to have participant indicative
data, including name, address, SSN, etc. because that information is
required to comply with Code requirements. For example, Lincoln is
required to report the name, address and SSN to the US Treasury for
distributions. In addition, the US Patriot Act requires such information
to be collected by a service provider in order to set up a retirement plan
account to ensure the participant is who he or she says they are.

You will note that all of the comments above make reference only to the
need to receive information for compliance purposes. Our desire to market
to non-participants or to provide better education is not required for tax
compliance, thus, we don’t believe there is a regulation that indicates
that is either legal or illegal to share participant indicative data for
the purpose of performing employee education. The argument that can be
made is that if a plan sponsor feels it is its duty to educate employees
on the benefits and importance of participating in the plan, such plan
sponsor can choose to delegate such education to its plan provider. The
plan sponsor can decide to share the data needed for the provider to
efficiently perform specific communication efforts.

It is routine for vendors who administer 401(k) plans to require such information. I'm not as familiar with 403(b) plans. If Lincoln is preparing the 5500, they need to know about all employees in order to determine if the plan is required to have an independent audit.

Is their education and marketing intended to assist the employer in meeting the universal availability rules?

[david rigby]

The school division may have other problems. Likely, Lincoln is asking for information that will be used in marketing. The school division may (already) have a policy about providing personal information to outside vendors, and may be advised to have legal counsel review the request before responding.

Especially concerning is the request for SSNs.