Retirement Savings Lost and Found Act Reintroduced in Congress

The bill would create an online database for participants to find "lost" retirement accounts and would change rules for automatic cashouts and rollovers.

Previously introduced in 2016, U.S. Senators Elizabeth Warren, D-Massachusetts, and Steve Daines, R-Montana, have reintroduced legislation aimed at addressing the retirement plan missing participant problem.

The Retirement Savings Lost and Found Act of 2018 would set up a Lost and Found online database that uses the data employers are already required to report, so that any worker can locate all of his or her former employer-sponsored retirement accounts. According to the bill text, the Retirement Savings Lost and Found Act will provide individuals only with the ability to view contact information for the plan administrator of any plan with respect to which the individual is a participant or beneficiary, sufficient to allow the individual to locate the individual’s plan.

Under the bill, a plan that failed to find a missing participant wouldn’t be treated as violating the required minimum distribution (RMD) rules and the Employee Retirement Income Security Act’s (ERISA) fiduciary rules if it has fulfilled certain requirements. These include making at least one (unsuccessful) attempt to contact the individual at the most recent address maintained for the individual in the records of the plan, by certified mail or other similar delivery service if the most recent address is a physical address, and by electronic mail or other electronic communication if the only address on record is an electronic address, and taking at least one (two, in the case of an individual for whom the plan records contain only an electronic address) additional measure.

The additional measures are:

  • Checked with the administrator of a related plan or checked the plan sponsor’s records for an updated address.
  • Made at least one unsuccessful attempt to contact the individual’s designated plan beneficiary.
  • Performed at least one search using free electronic search tools.
  • Attempted to locate the participant using a commercial locator service.

The bill increases the automatic rollover amount from $5,000 to $6,000 and expands investment options for these rollovers to include a target-date or lifecycle fund, an investment product designed to preserve principal and provide a reasonable rate of return, and another option as the Secretary of Treasury may provide.

For plan balances of $1,000 or less, if within six months of notification, the plan participant has not made an election to receive a distribution of the benefit directly or has not accepted any direct payment, the plan administrator can transfer the amount of such benefit to the Director of the Retirement Savings Lost and Found or to an individual retirement account established by the Secretary of Treasury on behalf of the individual.

The ERISA Industry Committee and the American Benefits Council have expressed support of the bill.