Should a retirement plan volunteer information to EBSA’s lost-and-found database?

Recently, the US Labor department announced a voluntary information collection request. It invites a retirement plan’s administrator to furnish the name and taxpayer identification number of each separated vested participant owed a benefit (or whose beneficiary is owed a benefit) and is (or would be) 65 or older. See column R on page 91801 https://www.govinfo.gov/content/pkg/FR-2024-11-20/pdf/2024-27098.pdf.

Should a plan’s administrator voluntarily do this?

If a plan’s administrator evaluates whether to do this, what should such a fiduciary consider?
 

I’ll start with one of my observations about how a fiduciary might evaluate the choice:

If an individual-account retirement plan provides its retirement (or death) distribution only as a single sum (with no periodic payment allowed), the value to the plan of putting in EBSA’s database the names and TINs of not-yet-paid participants 65 and older might be outweighed by the expense of collecting information and submitting it to EBSA’s database.

Yet, a loyal and prudent fiduciary ought to do some cost-benefit evaluation of the opportunity.

I'd also look at this from the employer/plan sponsor's nonfiduciary role.  In simple terms, the employer presumably maintains the plan as an employee benefit.  The end of that benefit is getting money to the former employee or his survivors.  I'd think the employer would want to ensure that.  So why not eliminate the fiduciary cost issue by having the employer absorb the cost as a business expense of maintaining the plan.  If I were the employer, that's what I think I'd do.   From a fiduciary standpoint, a consideration should be, "How likely is it that the DOL's Lost and Found Data Base is going to be effective"?  That's going to be tough to evaluate.  Based on my own experience dealing with the DOL, I'd say it's not likely to be effective.  What we don't know is whether the DOL's database will be set up and managed well. It sounds good in theory, but remember that humans at the DOL will be in charge.  On the other hand, maybe for those few cases it would work out it would be worth it.

Is there any substantive difference between this and the information on Form 8955-SSA?

Would the DOL (and plan sponsors) be better served by having the IRS provide the Form information to the DOL at the same time as providing it to the SSA?  (OK, maybe that requires a statutory change, but you get my point.)

The purpose of the data base is a benefit lost & found. It could arguably be imprudent and not in the exclusive interest of participants and beneficiaries for a fiduciary to fail to avail itself of a potentially reliable method of connecting lost & missing participants with their benefit. Since it's in early stages now, DOL's database may not be reliable, but the argument is there.

@david rigby: Sharing Form 8955-SSA information, or simultaneously filing the form to DOL, would make sense. However, the IRC (Sec. 6103) prevents IRS employees from disclosing confidential taxpayer information (which covers just about anything submitted on an IRS form to the IRS, so probably covers the Form 8955-SSA information), even to other federal agencies like the DOL, with narrow exceptions. If the IRS discloses confidential taxpayer information to another federal agency under an applicable exception, the receiving agency must safeguard the information. Even within an agency that receives confidential taxpayer information, the receiving agency (DOL) may not disseminate the information freely (only DOL investigators working on the particular investigation may access the information, and there are severe penalties for disclosure beyond the statutory and regulatory parameters). The DOL would have to safeguard that information by following special procedures that would preclude DOL from being able to use or disclose that information to anyone, even the participant themself, in a public database.

So your suggestion to use information already reported through Form 8955-SSA makes sense, and DOL probably should have gotten Congress to create a simultaneous filing (or information sharing exception to the IRC) for this database.

One other thought is that plan administrators file Form 8955-SSA at separation. There are reasons to want that information before a plan administrator would file a Form 8955-SSA. For instance, employers go out of business without filing such forms, and these are often the instances that result in orphan plans and lost benefits. So this DOL database arguably captures participants' information before separation.

The simple answer to the original question is "No!"  The data belongs to the plan and is controlled by fiduciaries.  Absent a regulatory REQUIREMENT, each and every client/fiduciary would have to consent, if not direct us to do so.  I guarantee you some will say no, and others will not respond, and we don't want to track who has allowed it and who hasn't - so it's not a capability we intend (for now).  Also, it's a lost and found that requires the participant to know, think, or at least suspect they have money, and then trust that the info is real and not a scam, and to be sure (I would, anyway) that my interaction with the database is secure.  Nothing worse than finding lost money only to have someone eavesdropping and then taking that money....  Good idea.  Very bad implementation.....

MoJo’s post explains some sensible business reasons for a recordkeeper not to offer a service to support a plan’s administrator’s choice to volunteer information to the Labor department’s database.

If an administrator’s recordkeeper doesn’t offer a service, that changes an administrator’s cost-benefit analysis about whether to volunteer.

While there are many weaknesses about this new lost-and-found database, let’s remember that the Labor department responded to Congress’s command. So, let’s blame Congress for not thinking about what they legislated.