The Department of Labor (DOL) is busy this year focusing on both regulating and identifying missing participants in multiple employer plans (MEPs). This past October, DOL published a proposed rule that attempts to make it easier to offer an association retirement plan as well as clearly delineate required disclosures for participants. While the rule may still face changes, it gives us a good idea of what to expect with the DOL’s regulation of MEPs.
Turning Executive Orders into Regulations
The focus on association health and retirement plans comes from an Executive Order signed by President Trump aimed at increasing the usefulness and access of small business owners to plans offered by their associations. DOL is responsible for identifying and addressing potential issues to protect plan participants and then looking at issuing regulations to comply with the Executive Order.
One major focus of both the proposed rule and current enforcement operations is on an association or multiple employer group’s record keeping efforts. More specifically, the steps MEPs take to keep track of the various plan members. Plan fiduciaries need to ensure they can locate plan participants even when those individuals have moved, changed their names, changed their employment, or gone through another life change. Long term, rather than rely on enforcement, the goal is to design regulations and best practices that encourage plan fiduciaries to keep track of all members and prevent the problem of a vested member not receiving benefits.
The Missing-Participants Issue
Because MEPs are, by definition, groups of employers offering a health or retirement plan, the recordkeeping is often less accurate than that conducted by larger corporations with dedicated HR departments. DOL and EBSA are working to try to understand current best practices in keeping track of the various plan participants. They are also looking at how MEPs go about finding their missing members. DOL is currently trying to audit programs for missing participants by looking at unpaid accounts. The goal is to determine if these unpaid accounts are due to bad recordkeeping on the part of the association or missing plan members.
In 2018, DOL was able to recover over $800 million for incorrectly terminated, vested retirement plan participants that had not received their benefits because plan administrators had lost track of them. While there is always an enforcement portion to DOL’s regulations, the hope is that the new rules limit the amount this enforcement is necessary.