The US Labor Department is facing notable challenges as it endeavors to build a registry for connecting retirement savers with unclaimed 401(k) plans. The Employee Benefits Security Administration (EBSA) has encountered significant obstacles in obtaining this crucial data, primarily resulting from the Internal Revenue Service’s (IRS) refusal to share plan data under the aegis of confidentiality rules. Instead, the EBSA is now relying on voluntary data submissions from plan sponsors.
However, this approach has its own set of complications. Plan sponsors often lack incentives to voluntarily disclose the necessary information. Moreover, there are pressing concerns related to cybersecurity and audit burdens that such data collection efforts could impose. These factors raise critical questions about the efficacy and security of the planned “lost-and-found” database for unclaimed retirement savings.
This initiative, mandated by Congress, aims to help connect individuals with their unclaimed retirement assets, which can be quite significant. For more details on the ongoing hurdles faced by the EBSA, refer to the Bloomberg Law article.