“My client received a notice from the Social Security Administration (SSA) titled, ’Potential Private Pension Benefit Information.’ Why did he receive this form and what does it mean?”

ERISA consultants at the Retirement Learning Center (RLC) Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare.  We bring Case of the Week to you to highlight the most relevant topics affecting your business.

A recent call with a financial advisor from Pennsylvania is representative of a common inquiry related to notices from the SSA.

Highlights of the Discussion

• Your client received a Form SSA-L99-C1, Potential Private Pension Benefit Information from the SSA to inform him that he “ … MAY be entitled to some private pension upon retirement.” His family may be entitled to retirement or survivor benefits as well.
• He received the form because, when an individual files a claim for Social Security benefits, the SSA automatically issues this notice to alert the individual that the SSA has knowledge of potential other retirement benefits that he or she may be entitled to receive under a defined contribution plan and/or defined benefit plan maintained at his former private employers.
• According to a study,[1] 26 percent of terminated individuals over a 10-year period left their assets in their former employers’ plans, which equated to 61 percent of plan assets in motion. One reason for this may be that former participants with higher plan balances are more likely to leave their plan balances behind than those with smaller plan balances.
• Your client may already be well aware of these additional benefits—and may have already received some of or all of them. But if not, you should review the plan information on the notice with your client and contact the plan administrator identified to make a claim for any benefits that may be due.  Some or all of these benefits may be eligible for rollover.
• The SSA keeps a database of individuals who have been identified by the IRS as having qualified retirement plan benefits under private employer-sponsored plans. When a former employee leaves behind accrued retirement benefits in an employer’s retirement plan, the employer must report such information to the IRS.
• The information on the SSA form is somewhat limited. Fortunately, the Department of Labor (DOL) put together a helpful Q&A piece on this topic FAQs on SSA Potential Private Retirement Benefit Information.
• Your client can contact the DOL with additional questions as well either on-line at “Ask EBSA” or by calling 1-866-444-3272.

Conclusion

Consider the Form SSA-L99-C1, Potential Private Pension Benefit Information  issued by the SSA, as a friendly, “heads-up” notice regarding private retirement benefits to which an individual may be entitled.

[1] Alight, “What do workers do with their retirement savings after they leave their employers,” 2018