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EB Flash: ERISA Advisory Council Provides Recommendations to DOL on Uncashed Checks and Financial Statement Audits

Employee Benefits Alert

The ERISA Advisory Council (Council), a 15-member panel of appointed advisors to the Department of Labor (DOL) and the Employee Benefits Security Administration (EBSA), met this week to preview its recommendations on the two major topics it choose to focus on this year: reviewing the treatment and procedures utilized by state unclaimed property funds to determine if voluntary transfers of uncashed distribution checks may assist in reuniting missing participants with their retirement savings and improving the financial statement audit process.

On the issue of unclaimed assets, the Council developed the following three recommendations: 

Recommendation #1

The Council recommends that the DOL issue guidance: 

  • Clarifying that uncashed distribution checks are "plan assets" within the meaning of ERISA § 3(42); and
  • Reaffirming that ERISA preempts state unclaimed property laws to the extent of such assets.

Recommendation #2

The Council recommends that the DOL issue guidance stating that a transfer of amounts attributable to a missing participant's uncashed check to a state unclaimed property program constitutes a payment of benefits under ERISA.

Recommendation #3

The Council recommends that the DOL issue guidance stating that: 

  • A plan fiduciary will be viewed as having satisfied its fiduciary responsibility under ERISA to the extent the fiduciary transfers amounts attributable to a missing participant's uncashed check to a state unclaimed property program that meets minimum standards, as determined by the Department (informed by the discussion in the Council's report); and
  • In connection with any such transfer, a plan fiduciary may rely on a state program's representation that it meets such minimum standards.

On the second issue regarding improving the financial statement audit process, the Council broadly recommends that DOL give plan administrators new "educational resources and access to tools and data regarding the uses of financial statement audits."  

The full text of the ERISA Advisory Council's 42-page Executive Summary of its recommendations is posted here

The Council will spend the next two months finalizing its recommendations and drafting a formal report scheduled to be issued in January.



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