ERISA Tips: Managing Participant Data

Managing participant data is a fiduciary duty under ERISA. But doing it — and doing it well — is also a way to efficiently run a business. A recent blog entry argues that it also provides a way to meet those duties and address the problem of missing participants — if not obviate it in the first place.

In “Best Practices for Managing Participant Data,” a recent entry in its blog, PlanPILOT adds that with heightened emphasis on locating missing participants, keeping data about participants up to date is more important than ever.

“When you have outdated or lost data, it is necessary to take the appropriate measures to find and identify missing participants and beneficiaries in order to notify them of plan changes or distributions,” says PlanPILOT. “Be sure to document each of your actions and the results,” it adds.

Not only are the Department of Labor and IRS focusing more on missing participants, warns PlanPILOT, the IRS is offering less help in finding them. But the DOL and IRS have offered some tips for doing so:

• send a notice by certified mail to the last known mailing address;
• send an inquiry to the designated plan beneficiary;
• send a notice to personal email address(es), phone numbers and emergency contact phone numbers on file;
• use internet search tools and public record search engines;
• do research through credit reporting agencies; and
• use commercial locator services.

PlanPILOT builds on that and suggests that best practices for managing participant data also include the following:

• Regularly update participant and beneficiary contact information. Include reminders in participant communications to encourage participants to advise plan sponsors and recordkeepers of any changes.
• Identify multiple points of contact for each record. Include: Mailing addresses, phone numbers and email addresses, as well as next of kin/emergency contact information.
• Establish a system for searches. Document steps taken for locating missing/unresponsive participants.
• Put procedures in place for managing missing participants’ accounts.

PlanPILOT adds that reviewing plan documents periodically and implementing a detailed process of managing participant data also will help the organization to keep participant data accurate and meet administrative and regulatory requirements and challenges.

Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at [email protected].