DOL Issues Guidance on Missing Participant Small Balances

The Department of Labor (DOL) has released Field Assistance Bulletin 2025-01 (FAB) providing guidance regarding the treatment of small balances of retirement plan missing participants and beneficiaries.

In the FAB, DOL announces a temporary enforcement action indicating that pending further guidance, the Department will not “pursue violations under ERISA section 404(a) in connection with the voluntary decision to transfer retirement benefit payments (including uncashed checks) owed to a missing participant or beneficiary from an ongoing pension benefit plan to a state unclaimed property fund, provided the present value of the participant's or beneficiary's nonforfeitable accrued benefit is $1,000 or less and the plan fiduciary complies with the applicable conditions set forth in this memorandum.” The guidance notes that rollover contributions must be included for purposes of determining the accrued benefit.

The FAB lays out the following conditions that need to be satisfied in order to remit small balances to the state unclaimed property fund.

1. The plan fiduciary determines that the transfer to a state unclaimed property fund is a prudent destination for the participant's or beneficiary's retirement benefit payments;
2. The plan fiduciary has implemented a prudent program to find missing participants consistent with the Department's Best Practices for Pension Plans, and nevertheless has been unable to locate the participant or beneficiary;
3. The plan fiduciary selects the state unclaimed property fund offered by the state of the last known address of the participant or beneficiary;
4. The plan's summary plan description explains that retirement benefit payments of missing participants or beneficiaries may be transferred to an eligible state fund and identifies the name, address, and phone number of a plan contact for further information concerning the eligible state funds to which the retirement benefit payments are transferred; and
5. The state unclaimed property fund qualifies as an eligible state fund as defined below.

DOL noted the development of the States’ Unclaimed Retirement Clearing House (SURCH) designed in part to address the operational complexity for pension benefit plans sending money to multiple states—without deducting fees from amounts returned to claimants. DOL further noted its intent to consider more formal guidance related to voluntary transfer of retirement benefit payments to state unclaimed property funds pursuant to its authority to establish the Retirement Savings Lost and Found under SECURE 2.0.