The Department of Labor recently issued Field Assistance Bulletin (FAB) 2025-01, which amounts to a temporary enforcement policy around the transfer of small retirement plan benefits \u2014 think $1,000 or less \u2014 to state unclaimed property funds. If that sentence alone gave you heartburn, you\u2019re not alone. It\u2019s another example of the DOL trying to thread the needle between fiduciary responsibility and administrative reality, especially when it comes to missing participants.<\/p>\n
Let\u2019s be clear: this FAB doesn\u2019t change the law. It\u2019s simply the DOL saying, \u201cWe won\u2019t come after you under ERISA\u2026 for now\u2026 if you meet these very specific conditions.\u201d Translation: temporary safe harbor \u2014 but only if you do your homework.<\/p>\n
Here\u2019s the gist. If a plan fiduciary transfers small balances (including uncashed checks) to a state\u2019s unclaimed property fund, the DOL won\u2019t enforce ERISA fiduciary breaches as long as all the conditions in the FAB are met. And there are plenty of them.<\/p>\n
To start, the benefit in question must be $1,000 or less \u2014 and no, you can\u2019t fudge that number by ignoring rollover contributions. You do get to ignore any outstanding plan loans, though.<\/p>\n
To get the enforcement relief, here\u2019s what you need to check off:<\/p>\n
\u00b7 You must determine the transfer is prudent \u2014 not just easy, not just common practice, but prudent under ERISA.<\/p>\n
\u00b7 You need to have a solid missing participant program in place, aligned with the DOL\u2019s Missing Participants Best Practices. If you haven\u2019t read those, now\u2019s the time.<\/p>\n
\u00b7 You must send the funds to the state unclaimed property fund tied to the participant\u2019s last known address.<\/p>\n
\u00b7 The SPD must disclose the possibility of transferring funds to the state, and include full contact info for someone at the plan who can answer questions. (Good luck finding someone who actually wants to answer those calls.)<\/p>\n
\u00b7 The state fund itself must meet a laundry list of conditions, including not charging fees, offering perpetual claims, searchable websites, and participating in MissingMoney.com and the Unclaimed Property Clearinghouse. In short, it has to be a real, functioning system \u2014 not some state-run black hole where money goes to die.<\/p>\n
There\u2019s a little bit of grace here: fiduciaries can rely on the state treasurer\u2019s word that a fund meets the criteria, unless they have actual knowledge otherwise. But if you know better \u2014 or should know better \u2014 don\u2019t count on plausible deniability.<\/p>\n
Now, I\u2019ve worked with enough plan sponsors to know this kind of administrative spaghetti isn\u2019t what they signed up for. The reality is, dealing with unclaimed property compliance is a full-time job \u2014 and most sponsors and recordkeepers are already overworked and understaffed. The DOL\u2019s intent here is fair: get money back in the hands of participants. But the execution? Burdensome, unclear, and impractical for most.<\/p>\n
My take? Leave the unclaimed property headaches to professionals. I\u2019d rather send the check to my friends at PenChecks and sleep at night. Let someone else deal with verifying state eligibility, tracking down participants, and jumping through hoops.<\/p>\n
Because in this line of work, doing something \u201ctemporarily OK\u201d under a FAB isn\u2019t worth the risk of getting burned later when the rules change.<\/p>\n
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