Compliance April 16, 2024

DOL Asks Plan Administrators to Provide Participant Data for Lost and Found

The missing participant database requires plans to voluntarily turn over participant data to the DOL.

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The Department of Labor has issued an information collection request asking plan administrators to voluntarily turn over information to the DOL that would enable it to create a lost and found for retirement plans governed by the Employee Retirement Income Security Act.

The lost and found is a database that would allow missing participants and plans to find each other, hopefully mitigating the issue of missing participants that struggle to locate their retirement savings. The creation of such a database is required by December 29, 2024 under the SECURE 2.0 Act of 2022.

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The DOL’s April 15 request includes a request for comments on what information would best enable it to create a proper database for this purpose and how the department can reduce the burden for participating administrators. The comment period for improving the data collection process closes on June 17.

Initially, according to the information collection request, the DOL had intended to rely on information collected by the Internal Revenue Service through Form 8955-SSA, a filing in which qualified plans submit data on vested participants who have separated from participating employers. The IRS shares this document with the Social Security Administration, who then informs participants of their missing benefits when they apply for Social Security benefits.

This document may seem tailor-made for a lost and found database, but the IRS has said it does not have the legal authority to share the data with the DOL for purposes of contacting participants, due to confidentiality provisions in the Internal Revenue Code.

As a result, the DOL is asking plan administrators to provide contact information directly to the DOL voluntarily. The regulator is asking plans to provide the following for vested separated participants: names and Social Security numbers, contact information, mailing address, and whether they have received an involuntary distribution already.

The DOL also asked plans to indicate if a participant has been unresponsive to contact and to provide information on their designated beneficiaries, as well as the nature and amount of the benefit to which they are entitled.

Administrators would provide this information to the DOL as an attachment to their Form 5500 filings.

One of the three bills that later became SECURE 2.0, the Enhancing American Retirement Now Act, proposed in the Senate, would have made the Treasury Department responsible for creating a lost and found. Instead, it was assigned to the DOL by the House version, the Securing a Strong Retirement Act of 2022.

An explainer from the Groom Law Group suggests that keeping the database in-house at Treasury would have likely enabled IRS to provide the data from Form 8955-SSA for this purpose.

Kendra Isaacson, a principal at public policy consultancy Mindset and a former tax counsel for the Senate Committee on Health, Education, Labor and Pensions, says that the lost and found was assigned to DOL because “fiduciary functions have always resided at the Department of Labor, and finding missing participants is a fiduciary function.”

Although it is true that the IRS would have been able to use Form 8955-SSA to build a database, Isaacson explains, it lacks the experience with tracking participants and other fiduciary functions that DOL has.

The DOL has not set a deadline for the voluntary turnover of information at this time, but has itself until December 29 to complete the database.

Client Service April 16, 2024

HSAs: Holistic Education and Targeted Outreach

Advisers and plan sponsors should embrace holistic financial wellness and targeted outreach when engaging participants about health savings plans.

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Health savings plans can be complicated for participants, but advisers and plan sponsors can combat that confusion with holistic education and access to informational resources, according to panelists speaking at the 2024 HSA Conference held by PLANSPONSOR, which is a sister publication of PLANADVISER.

For plan sponsors, it’s important to pay attention to spending across the health and retirement plan when strategizing, according to Gregory Puig, partner and head of group insurance at Sentinel. There should be one benefit bucket for the retirement plan and health plan, as well as a focus on determining whether there is overspending in match dollars and underspending in employee contributions to the health plan.

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If positioned correctly, these components can then be adjusted annually based on the feedback and needs of the employees. Of course, Puig notes, a key component of such a setup working is if the employee is enrolled in the HSA as soon as possible while building up savings.

“While having open enrollment, [an employer should] clue in their retirement adviser,” he said. “Have the adviser and the broker come together, covering some medical slides, covering some retirement slides.”

In the past, advisers would often educate participants on a one-on-one basis with a focus on retirement. But, according to Puig, that can’t be the case anymore; participants require more holistic financial wellness educators.

“We need people who are going to understand the whole picture and help people ask questions,” he said. “Because the tools that we develop – virtual tools, AI tools, online tools, mobile tools – they’re great but we know that only helps ‘X’ percent of the population. We still have a big piece of the population who don’t want to navigate that. They don’t want to learn that way.”

Michael Eldredge, HSA investment product manager at Inspira Financial, still emphasized the importance of effective digital outreach for overall engagement. He said targeted email has been a useful tool to encourage increases in HSA adoption, investments and contributions.

“So far we’ve engaged in email targeting campaigns, which the employer has to sign off on,” he said. “We try to take the effort out of their hands. We create the communication through the various logistics […] Over time we also want to have the user interface on the website include some coaching and next best action type of interventions. That’s what we’re evolving toward.”

Jake Spiegel, research associate at EBRI, added that a plan sponsor should follow-up to see which outreach campaigns are effective; Spiegel looks at how participant behavior changes after receiving notice of an employer contribution to their HSA.

“What we find is that people who have the benefit of an employer contribution tend to make contributions overall,” he said.

According to Spiegel, the employer contribution allows employees to get a higher overall total contribution while taking a little bit of the burden off the worker themselves. Additionally, people who receive the benefit of an employer contribution are much more likely to invest their HSAs.

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