The Plan Sponsor Council of America (PSCA), a part of the American Retirement Association (ARA), has submitted written guidance on missing participants to several agencies including the Department of Labor (DOL), the U.S. Department of the Treasury, and Internal Revenue Service (IRS).
PSCA explains that it provided this guidance in response to recent Department of Labor enforcement activity as well as a Government Accountability Office (GAO) request. Additionally, PSCA has signed on to a letter to the DOL regarding this issue sent by a group of concerned trade organizations.
In a public statement published alongside the comment letter, PSCA explains that it first requested back in April 2017 additional guidance from the IRS and DOL regarding various Internal Revenue Code and Employee Retirement Income Security Act (ERISA) compliance issues that arise when there is a missing or nonresponsive participant and proposed a sample safe harbor plan.
“Since this request, there have been numerous reports of aggressive DOL enforcement activity, and sometimes inconsistent positions taken by DOL auditors, regarding how plan sponsors are handling missing participants,” PSCA writes. “We have heard concerns from our plan sponsor members that they have been or may be subjected to enforcement actions even though the DOL and IRS have not issued comprehensive guidance on missing participants that provide a clear roadmap for compliance.”
The PSCA comment letter emphasizes the benefits of the sample safe harbor plan originally proposed in the April 2017 correspondence.
“The sample plan provides plan sponsors with ten clear steps to locate missing participants for certain plans while continuing to meet their fiduciary obligations and preserve their plan qualification,” PSCA explains. “In encouraging the IRS and DOL to jointly issue guidance and adopt such a plan, plan sponsors, particularly small plan sponsors, would no longer have the necessity to attempt to harmonize inconsistent guidance issued by separate agencies.”
Additionally, although PSCA says it recognizes that the IRS’ lack of sufficient staffing and resources impacts the feasibility of elements key to the success of the proposed safe harbor plan, such as the letter forwarding service, the advocacy group argues that the program can be reinstated “in a manner that meets the needs of both the IRS and plan sponsors.”
“As the agencies work to develop guidance, PSCA remains committed to assisting the responsible agencies and the plan sponsor community in navigating these complex and highly important issues,” the group confirms.
Read the full comment letter here.