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OPA News Release: [03/09/2005]
Contact Name: Jane Norris or Gloria Della
Phone Number: 202-693-4676
Release Number: 05-0378-NAT

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.

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