On January 14, 2025, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin 2025-01, outlining a temporary enforcement policy regarding the transfer of small retirement benefit payments from ongoing ERISA-covered defined benefit (DB) and defined contribution (DC) plans to state unclaimed property funds.

The DOL has been engaged with industry experts and stakeholders to investigate ways for retirement plans to address the challenges of missing and unresponsive participants and beneficiaries. Traditionally, the DOL has encouraged individual retirement accounts (IRAs) as the best option for transferring funds related to missing and unresponsive participants and beneficiaries from terminating DC plans, in order to fully distribute all plan assets. However, depending on the circumstances, they recognized that a transfer to state unclaimed property funds might also be appropriate. This latter option may be preferable to rolling over plan benefits into IRAs, as state funds do not incur fees and have effective systems in place to reunite participants with their retirement savings. Plan fiduciaries should prudently weigh the appropriateness and consequences of each alternative on a participant or beneficiary, including the tax consequences.

The SECURE 2.0 Act of 2022 established the Retirement Savings Lost and Found (RSLF) database to help people locate plans in which they were a participant or beneficiary and make a claim for any vested benefits owed to them. In light of the new RSLF database, this temporary enforcement policy has been issued while the DOL considers more formal guidance on the voluntary transfer of retirement benefits from ongoing DB and DC plans to state unclaimed property funds.

Temporary enforcement policy

The DOL will not enforce ERISA section 404(a) violations relating to plan fiduciary duties for voluntarily transferring retirement benefit payments from ongoing plans, including uncashed checks, to a state unclaimed property fund for missing or unresponsive participants or beneficiaries, provided the vested benefit's present value is $1,000 or less (excluding any outstanding plan loans but including rollover contributions) and fiduciaries adhere to the following conditions:

• Prudence: The plan fiduciary must determine that the transfer to a state unclaimed property fund is a prudent decision.
• Best practices compliance: The plan fiduciary must be unable to find or obtain a response from the participant or beneficiary despite having followed the plan’s missing participants program, in line with the DOL’s Missing Participants – Best Practices for Pension Plans.
• State selection: The plan fiduciary must choose the state unclaimed property fund of the participant's or beneficiary's last known address.
• Disclosure in the summary plan description: The plan’s summary plan description must state that retirement benefit payments of missing or unresponsive participants or beneficiaries may be transferred to a state fund and provide plan contact information for individuals to obtain additional information.
• Eligible state fund: The state unclaimed property fund must satisfy the criteria below. Unless a plan fiduciary knows otherwise, the fiduciary may rely on a state treasurer’s representation that the fund:
• Serves as the custodian of the funds for the affected participants, beneficiaries, and their heirs, allowing claims and payments to be made indefinitely regardless of when the state received the funds.
• Ensures that the transfer amount is not reduced by any fees or charges.
• Maintains a searchable website that shows, free of charge, the name of the missing participant or beneficiary and the plan name and provides a process for electronic claims.
• Provides a means for the public to ask about unclaimed funds via physical mail, email, and telephone.
• Participates in the MissingMoney.com website managed by the National Association of Unclaimed Property Administrators or a similar noncommercial database operated by the National Association of State Treasurers, Inc.
• Offers streamlined processing for small claims, such as those of $1,000 or less.
• Conducts diligent searches for updated addresses for missing participants and beneficiaries at least annually for unclaimed amounts over $50 and, upon finding an updated address, notifies the owner in writing that the state fund holds their money.
• Allows plans to get reimbursed from the state if funds were transferred to the state’s unclaimed property fund and the plan later pays the participant or beneficiary directly once they reappeared.
• Participates in the States’ Unclaimed Property Clearing House, operated by the National Association of State Treasurers, Inc.

Please contact your Milliman consultant for advice on how these provisions may impact your plan(s).