"Do you know where your participants are?"

Those of us who have been around since the late 1960s remember the iconic television public service announcement that was preceded an announcement of the time: "It's 10 p.m., do you know where your children are?" The implication was that if you didn't know where your children were, perhaps your parenting skills needed improvement and your children could be in danger. A new announcement from the DOL has us asking, "Do you know where your former employees are?" In particular, those who still have money left in your company's retirement plan. If you don't, there could be serious consequences.

The DOL has announced a country-wide initiative to send requests to retirement plan sponsors, asking for current contact information for selected participants. Sponsors who cannot give accurate information may subject their plan to an audit. Importantly, the DOL considers it a breach of fiduciary responsibility if the plan sponsor cannot contact participants who have balances in the plan, unless a diligent effort has been made to locate them.

What constitutes a "diligent effort?" There is no definitive list, but here are some actions that we believe will show a diligent effort.

1. Send a letter by certified mail, or a recognized delivery service like UPS, DHL, or Federal Express, to the employee's last known address, informing them about their retirement account and asking for them to make a decision as to its disposition. If the letter is returned because the address is incorrect, save the returned letter with a record of the date it was sent and returned.

2. Attempt to contact the participant by phone, email, or text. Save a copy of the attempt to contact (either a paper or electronic record is sufficient).

3. Do an internet search using Google, Bing, Yahoo, ask.com, or a similar search engine. There are also free "people search" sites like http://www.ussearch.com.

4. Search for the participant on Social Media such as Facebook, LinkedIn, Twitter, etc.

5. If you have a beneficiary form from the participant, try to contact the beneficiaries for information about the participant. If you remember the participant's spouse, children, parents, other relatives or friends, attempt to contact them for information.

6. Check with your payroll company to find out if they offer a service to locate former employees. If checks were being directly deposited, the payroll company may be able to contact the former employee through their bank.

7. Hire a commercial locator service such as http://www.employeelocator.com.

Even if you have followed these procedures, there is no guarantee that you'll locate the person. But keep the documentation so that you have proof you made a diligent effort to locate the participant and avoid a costly fiduciary breach.

Preferred Pension Planning Corporation to Participate in Charity Event

On Oct 7, Preferred Pension Planning Corporation (PPPC) will take part in the American Heart Association’s Central New Jersey Heart Walk. The event will take place at Arm & Hammer Park in Trenton, NJ. Participants will have the option between a one-mile or three-mile walk to raise funds for heart disease and stroke research.

Heart disease is the number one cause of death in the United States, and stroke is number five. While advancements in heart health have advanced dramatically over the past several decades, there is still more work to be done.

“It's been more than one year since we lost our beloved co-worker, Jay Driver, who passed away on his way to work on August 23, 2016,” said Lawrence J. Zeller, President of PPPC. “We're walking in his memory and we'll be calling our team ‘The Jay Walkers.’ Jay's wife, children, and friends will be joining us, and we welcome and encourage anyone to join us or support us by making a pledge of any amount.”

The American Heart Association, founded in 1924, is the nation’s largest and oldest volunteer organization dedicated to fighting heart disease and stroke. They fund innovative research, fight for stronger public health policies, and provide critical tools and information to save and improve lives.

If you're interested in donating to the cause, or if you would like to sign up to walk with us for the event, please contact Jill Murphy at jlmurphy@preferredpension.com, or call Jill at 908-575-7575, or visit http://bit.ly/heartwalknj to learn more.

The staff of Preferred Pension Planning Corporation has many years of experience in all facets of employee benefits. Our broad technical expertise gives us the basis to provide quick, accurate and practical solutions to your benefit plan questions and problems. For more information about our services, please visit http://www.preferredpension.com

Is Your Pension Money Protected From Creditors?

If you owe money to a credit card company, bank, or other creditor, can they attach your pension or 401(k) account? In other words, can they take what you owe them out of your pension account before you receive it?  In most cases, the answer is a definite "NO."  Pension plans covered by ERISA (the Federal pension law) must contain the "anti-assignment and alienation rule," which states that money in the plan is not available to creditors. Similarly, creditors of the employer sponsoring the plan cannot attach plan assets, which are held in a trust and are not part of the employer's assets.  

As usual, there are exceptions to the rule. For example, someone who commits fraud or a fiduciary breach that causes financial damage to the plan can have his or her account attached to repay the plan for the damage. Certain tax liens can be paid from plan assets. And pension assets can be considered part of the amounts to be split up during a divorce, using an agreement called a QDRO.

In a bankruptcy, pension assets are not considered as part of the "bankruptcy estate" to be split up among creditors. But the anti-assignment and alienation rule also means that you generally can't use your pension assets as collateral for a loan or other debt. And once the money is distributed from the plan, it is no longer protected.

Generally, retirement plans covered by ERISA afford broader protection than IRAs. State laws, rather than Federal laws, apply to the protection of the benefits in IRAs.

Overall, retirement plans can provide a very effective way to shield assets from creditors, as long as you're aware of the exceptions.

Math Tricks

If you ever have to multiply a number by 5 in your head, here's a shortcut: Multiply by 10, then divide by 2. For example, how much is 84 times 5? It's easy to multiply 84 times 10 and get 840, and then cut 840 in half and get 420.

In Memory of Jay Driver

On August 23, 2016, Preferred Pension Planning lost one of our brightest stars, Jay Driver. Jay tragically passed away on his way into the office that morning. Jay was 41 years old. Jay was not only a great pension consultant; he was a wonderful human being. He always had a huge smile on his face and brightened every room the moment he entered. Jay was a man who cared deeply about his family, friends, and co-workers. He deeply loved his wife, and adored his four children and his dog. He spoke lovingly of his parents, brother, and sister. While Jay always had a joke or funny comment, underneath there was truth and wisdom at all times.

Jay's knowledge of the pension field was tremendous. He achieved the highest professional designations in our field, and loved his work. Whenever anyone in the office had a tough technical question, Jay was the man to turn to, as he could analyze the situation and determine the best course of action.

Jay's antics kept us all amused. At work, Jay always had a story to tell at staff meetings that made us laugh at the same time we were learning. Jay was incredibly patient and loved to mentor his colleagues and our clients. At home, he loved to post entertaining videos on Facebook. He posted a video of himself in the shower singing Happy Anniversary to his wife. He posted a video of himself doing an imitation of Louis Armstrong singing "What a Wonderful World."

The world lost a compassionate and brilliant man this week. We are fortunate to have worked with Jay during the past 8 years. We will never forget the contributions Jay made to Preferred Pension Planning as a pension consultant, and how he made us all better human beings.