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OUR THOUGHTS ON:

DOL Provides Much Needed Guidance on "Orphan Accounts"

ERISA

By Todd Lucas

The Department of Labor (DOL) recently released updated guidelines for fiduciaries to track down missing participants in defined contribution plans who are no longer employed by the plan sponsor.  While Field Assistance Bulletin No. 2014-01 (which replaces Field Assistance Bulletin 2004-02) applies only to defined contributions that are terminating, it provides useful guidance to fiduciaries in finding missing or unresponsive participants.

It is estimated that in 2010, there was $1 trillion in orphaned retirement accounts.  As individuals continue to have more and more jobs during their professional careers, the number of accounts and dollars within these accounts can be expected to grow.   

Field Assistance Bulletin No. 2014-01 requires that, at a minimum, fiduciaries take the following steps to find missing participants:

  • Use certified mail
  • Check related plan and employer records
  • Check with designated plan beneficiary
  • Use free electronic search tools

If fiduciaries are unable to locate missing participants using the above steps, they should consider the participant’s account balance and the expense associated with additional search efforts in determining whether additional search steps are appropriate. 

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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