The U. S. Department of Labor has proposed rules to allow financial institutions
to take responsibility for abandoned 401(k) plans and distribute the plans'
assets to workers and their families.
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Get Your Report Now!Each year, approximately 1,650 401(k) plans holding $868 million in assets
and covering 33,000 workers are abandoned.
"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, according to the
department.
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.
The proposed regulations and exemption are published in the March
10, 2005 Federal Register.