Are you required to check your census data?
Yes. Check it, recheck it, and recheck it. When in doubt, check it.
Communication with participants, whether actively employed or ex-employees with a balance, is your fiduciary responsibility when you administer a retirement plan. To properly communicate with all your participants, verifying that your census information—including physical address, contact phone number, and personal email address—is accurate and up-to-date is critical.
You might be wondering why you need to do this.
Many participants fail to update their personal information with their payroll administrator or 401(k) plan when their address changes. The most common reason for this omission (outside of plain old forgetfulness) is that employees don’t need an updated address to be paid. Today, most employees receive their paychecks via direct deposit, and an accurate address, email address, and phone number have no relevance in that case. Participants could change addresses dozens of times, but their bank accounts will continue to magically appear there as long as their bank accounts don’t change.
Generally, notifying the payroll department or updating the 401(k) system is a low priority for people amid a move. As a result, many long-term employees forget to make the needed changes to their personal information. If this is the case, a participant could miss multiple notices before anyone realizes their census data is inaccurate.
In early 2021, the Department of Labor (DOL) released its best practices regarding communication with retirement plan participants, focusing on reducing the number of “missing participants.” As a part of these best practices, the DOL recommends census verification a minimum of once a year, along with providing all participants a reminder regarding how they can update their personal information if it ever changes.
So, since it can be difficult for people to remember to update their information when they should, how can you keep census data accurate?
It all boils down to communication with your participants. The most conscientious way to keep your information current is through regular, direct contact with each participant (active employees and ex-employees with a balance). The purpose of the communication is to confirm that their contact information in the retirement plan system is up-to-date and that they’re receiving their statements and notices. This strategy shows diligence and prevents you from reacting if mail is returned or a participant who hasn’t received communication for a long time inquires. Furthermore, documenting your diligent efforts regarding census verification will be invaluable if the DOL, the IRA, or a litigation attorney ever questions you.
Please contact us if you’re interested in how Plan Notice can support your plan’s census confirmation. Plan Notice provides regular, comprehensive census verification and confirms receipt of all required plan noticing. In addition, when engaged with a plan, Plan Notice indemnifies the plan sponsor and administrator from any liability relating to improper (or lack of) notifications that could result in either litigation or a Department of Labor investigation.
