Do I need to track my plan notices?

Yes. It would be best to track your plan notices to show that they were sent and received. 

The human resource adage is “document, document, document. Regarding the retirement plan procedure, you should repeat the same mantra. Record everything you do! In early 2021, the Department of Labor (DOL) released its best practices regarding proper communications with 401(k) participants. The impetus of the DOL’s announcement was a report showing over one trillion dollars of orphaned 401(k) accounts in the country. 

With the release of their best practices, the DOL confirmed that the responsibility for communication falls on plan sponsors and administrators. In other words, it’s not the participants’ obligation to seek out their 401(k) information; it’s your responsibility to provide it. The purpose of defining this responsibility was to cement the plan sponsors’ fiduciary obligations to:

1. Ensure that participants receive communication.
2. Ensure that the plan follows a detailed process to increase the likelihood that both active and terminated participants receive the required information about their retirement assets.

While the DOL’s best practices don’t clearly define what documentation is required, past audits have shown that when the DOL selects a plan for investigation, it requests proof that notices were sent and that the escalation process needed to find missing participants was followed. Therefore, for compliance reasons, it’s critical to track all your efforts and keep files indicating that:

• You have developed a detailed noticing procedure.
• You have clarified a process for dealing with missing participants.
• You have documentation proving that you execute these procedures regularly.

The DOL hasn’t defined the required procedures; instead, they’ve built the flexibility for each plan to determine its process and system. However, as with most human resource policies, ensuring the defined policy is consistently executable is critical. In the case of a DOL, IRS, or litigation attorney’s investigation, you may have to produce both the policy and proof of execution.

Please get in touch with us if you’re interested in discussing how Plan Notice can support your communication with your 401(k) participants. Our service takes over your responsibility for sending participant notices, and we accept all liability in the case of a DOL audit associated with communication and noticing. Our job is to develop the process, the systems, and the detailed audit trail to prove that your notices are distributed correctly and that all your participants receive them.

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