Labor
Department Proposes Rules to Help Workers In Abandoned 401(k) Plans
WASHINGTON—Each
year, approximately 1,650 401(k) plans holding $868 million in assets and covering
33,000 workers are abandoned. Today, the U. S. Department of Labor announced proposed
rules to allow financial institutions to take responsibility for these plans and
distribute the plans' assets to workers and their families.
“Thousands
of workers who have been denied access to their retirement benefits through no
fault of their own will benefit from our proposed rules,” said Assistant
Secretary of Labor Ann L. Combs. “Our proposal will empower financial institutions
that hold plans' assets to help participants gain access to their retirement benefits.”
The
department currently deals with abandoned plans on a case-by-case basis, often
with the involvement of the courts. The proposed rules provide standards for determining
when a plan is abandoned and establishes a process for winding up the affairs
of the plan and distributing benefits to workers in the plan. When implemented,
the process would eliminate the need for costlier court approvals and allow workers
to regain access to their benefits sooner. The proposal also provides guidance
on the application of tax qualification rules to plans terminated under this regulation.
The recommendations of the department's ERISA (Employee Retirement Income Security
Act) Advisory Council contributed to the development of the proposed rules.
A
fact sheet detailing the proposed rules can be found at www.dol.gov/ebsa. Public
comments on the proposed rules should be submitted to the U.S. Department of Labor,
Employee Benefits Security Administration, Room N-5669, 200 Constitution Ave.,
N.W., Washington, D.C. 20210, Attention: Abandoned Plan Regulation; or by email
to e-ORI@dol.gov. The proposed regulations and exemption are to be published in
the March 10, 2005 Federal Register.
