Small Accounts? Send it to the State’s Unclaimed Property Fund

The DOL’s Employee Benefits Security Administration (EBSA) recently announced a temporary enforcement policy under ERISA that makes it easier to unload small retirement benefit payments owed to missing participants or beneficiaries. Provided the participant's or beneficiary's nonforfeitable account/accrued benefit is $1,000 or less (without counting any outstanding plan loan), a responsible plan fiduciary can pay the amount to a state unclaimed property fund, whether from an ongoing defined contribution or a defined benefit plan. Field Assistance Bulletin 2025-01.

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• Locating Missing Participants in Qualified Retirement Plans
  Take advantage of EBSA’s temporary enforcement policy to eliminate small accounts owed to missing participants and beneficiaries in your retirement plans. The plan fiduciary first must have applied a prudent program to find missing participants consistent with DOL’s best practices for pension plans but nevertheless has been unable to locate the participant or beneficiary.

• Missing Participant PBGC Program Procedures Checklist
  Review how the Pension Benefit Guaranty Corporation (PBGC) has a program in place for distributing account balances for missing participants and beneficiaries in terminating defined contribution plans (contrasted with ongoing plans). The PBGC’s temporary nonenforcement policy is set forth in Field Assistance Bulletin No. 2021-01, which provides that the DOL generally will not pursue ERISA fiduciary violations against responsible plan fiduciaries or other responsible persons arising from the transfer of a missing or nonresponsive participant's or beneficiary's account balances to the PBGC (rather than to an IRA, certain bank accounts, or to a state unclaimed property fund), so long as it has been done consistent with the guidance in Field Assistance Bulletin 2021-01.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

• Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
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