Unclaimed Retirement Benefits are a Growing Problem, and Congress is Taking Notice

H.R 5325, a bipartisan bill also known as the Unclaimed Retirement Rescue Plan, was introduced on September 11, 2025, and would direct the Department of Labor (“DOL”) to promulgate a regulation allowing pension plans and other fiduciaries to voluntarily transfer certain unclaimed retirement distributions valued up to $5,000 to state unclaimed property programs via the States’ Unclaimed Retirement Clearing House (SURCH).  The regulation would be promulgated within 180 days of the bill’s enactment date.

The bill’s sponsors, Seth Magaziner and Ron Estes, previously recommended that the DOL create a nationwide regulation to allow state unclaimed property programs to “serve as a vehicle for reuniting individuals with their uncashed distribution checks.”  Per a letter sent to the DOL in October 2024, there are “29.2 million unclaimed 401(k) holding approximately $1.65 trillion in assets, often because of a job change or a former employer has gone out of business.”

Terminating plans would need to wait 90 days before transferring the unclaimed funds, whilst ongoing plans would need to wait at least 12 months after an amount becomes payable.

For unclaimed retirement distributions that are $50 or more, fiduciaries would be required to identify via an informational database search and via a search of a commercially reasonable outside source, a current address and contact information of the participant and beneficiary, if the plan or fiduciary has reason to believe that the contact information is inaccurate and send notice to the participant or beneficiary of the distribution (via email, online portal or the U.S. mail), explaining that the plan or fiduciary is in possession of the distribution and that absent a timely response, it will be transferred to the state’s unclaimed property program where the participant or beneficiary last resided.  Instructions must be included on how to prevent the transfer. Notice is not required if an updated address cannot be found.

Pension plans and fiduciaries that satisfy the requirements of the regulation will be granted relief from the requirements under Sections 404(a) and Section 406 of ERISA and will also not violate Section 404(a) or be subject to liability for transmitting participant data to a state unclaimed property program, provided that reasonable care is exercised when making the transmittal.

The transfer, along with regular updates, must be reported to the DOL every 90 days so that the data can be included in the Retirement Savings Lost and Found Database.

H.R. 5325 follows Field Assistance Bulletin (FAB) 2025-0, issued earlier this year, under which the DOL asserted that it would not pursue any ERISA violations in connection with a retirement plan’s voluntary decision to transfer retirement benefit distributions, including uncashed checks from an ongoing pension benefit plan, to state unclaimed property funds, so long as the value of the unaccrued benefit at the time was $1,000 or less and the plan fiduciary complied with certain conditions, including attempting to locate missing participants.  If they were unable to locate them, they could then send the funds to the unclaimed property program of the state of the participant’s last known address.  The DOL also required that the fiduciaries’ plan documents include a representation that the plan could transfer unclaimed distributions to state unclaimed property programs.  Finally, the state unclaimed property programs themselves also had a list of conditions to meet to receive such distributions.

At MarketSphere, we are uniquely positioned to assist companies with their unclaimed property needs and help retirement plans and fiduciaries navigate the complex challenges of locating missing participants.  While legislation like H.R. 5325 may create new options for fiduciaries, proactive outreach and robust search strategies remain the most effective way to protect participants — and reduce administrative risk. Our proven process and proprietary workflow system give plan sponsors peace of mind that they are meeting their fiduciary responsibilities while keeping more assets in participants’ hands. Contact us to learn more.