The Plan Sponsor Council of America (PSCA), a part of the American Retirement Association (ARA), has submitted written recommendations for guidance on missing participants to several agencies, including the Department of Labor (DOL), the Treasury Department and IRS.
The PSCA provided this guidance in response to recent DOL enforcement activity as well as a Government Accountability Office (GAO) request. The PSCA also has signed on to a letter to the DOL regarding this issue sent by a group of concerned trade organizations.
In April 2017, the PSCA notes, it first requested additional guidance from the IRS and DOL regarding Internal Revenue Code and ERISA compliance issues that arise when there is a missing or nonresponsive participant; it also proposed a sample safe harbor plan.
Since that time, the PSCA notes, “there have been numerous reports of aggressive DOL enforcement activity — and sometimes inconsistent positions taken by DOL auditors — regarding how plan sponsors are handling missing participants.” The PSCA also reports that it heard concerns from its plan sponsor members that they had been or could be subjected to enforcement actions “even though the DOL and IRS have not issued comprehensive guidance on missing participants that provide a clear roadmap for compliance.”
In response to that enforcement activity and the GAO’s January 2018 report recognizing that guidance is critical in addressing the missing participant issue, the PSCA responded in writing again. It reiterated the benefits of the sample safe harbor plan it originally had proposed in the April 2017 correspondence, which includes 10 clear steps for locating missing participants for certain plans while continuing to meet fiduciary obligations and not putting a plan’s qualified status in jeopardy. The PSCA argues that encouraging the IRS and the DOL to jointly issue guidance and adopt such a plan would result in plan sponsors — particularly small ones — would no longer need to try to harmonize inconsistent guidance separate agencies issue.
In addition, says the PSCA, although it recognizes the IRS’ report that its lack of sufficient staffing and resources affects the feasibility of elements key to the success of the proposed safe harbor plan — such as reinstating the letter forwarding service — the PSCA believes that the program can be reinstated in a manner that meets the needs of the IRS as well as plan sponsors.
The PSCA also reiterated its support for the safe harbor approach it outlined and said that it “remains committed to assisting the responsible agencies and the plan sponsor community in navigating these issues.”