DOL Asks for Participant Information to Build Lost and Found Database

The Department of Labor has issued an information collection request asking plan administrators to voluntarily turn over information to the DOL that would enable it to create a participant lost and found for retirement plans governed by the Employee Retirement Income Security Act.

The lost and found is a database that would allow missing participants and plans to find each other, hopefully mitigating the issue of missing participants that struggle to locate their retirement savings accounts. Creation of such a database is required by December 29, 2024 under the SECURE 2.0 Act of 2022.

The DOL’s April 16 request includes a request for comments on what information would best enable it to create a proper database for this purpose and how the department can reduce the burden for participating administrators. The comment period for improving the data collection process closes on June 17.

Initially, according to the information collection request, the DOL had intended to get the lost and found information from data collected by the Internal Revenue Service through Form 8955-SSA, a filing in which qualified plans submit data on vested participants who have separated from participating employers. The IRS shares this document with the Social Security Administration, who then informs participants of their missing benefits when they apply for Social Security benefits.

This document may seem tailor-made for a lost and found database, but the IRS has said it does not have the legal authority to share the data with the DOL for purposes of contacting participants, due to confidentiality provisions in the Internal Revenue Code.

As a result, the DOL is asking plan administrators to provide contact information directly to the DOL voluntarily. The regulator is asking plans to provide the following for vested separated participants: names and Social Security numbers, contact information, mailing address, and whether they have received an involuntary distribution already.

The DOL also asked plans to indicate if a participant has been unresponsive to contact and to provide information on their designated beneficiaries, as well as the nature and amount of the benefit to which they are entitled.

Administrators would provide this information to the DOL as an attachment to their Form 5500 filings.

One of the three bills that later became SECURE 2.0, the Enhancing American Retirement Now Act, proposed in the Senate, would have made the Treasury Department responsible for creating a lost and found. Instead, it was assigned to the DOL by the House version, the Securing a Strong Retirement Act of 2022.

An explainer from the Groom Law Group suggests that keeping the database in-house at Treasury would have likely enabled IRS to provide the data from Form 8955-SSA for this purpose.

Kendra Isaacson, a principal at public policy consultancy Mindset and a former tax counsel for the Senate Committee on Health, Education, Labor and Pensions, says that the lost and found was assigned to DOL because “fiduciary functions have always resided at the Department of Labor, and finding missing participants is a fiduciary function.”

Although it is true that the IRS would have been able to use Form 8955-SSA to build a database, Isaacson explains, it lacks the experience with tracking participants and other fiduciary functions that DOL has.

The DOL has not set a deadline for the voluntary turnover of information at this time, but has itself until December 29 to complete the database.