The Department of Labor's Employee Benefits Security Administration has approved a request from JP Morgan Chase Bank NA and ADP Inc. to terminate or wind up about 180 defined contribution pension plans that have been abandoned because of corporate crises or neglect.
The EBSA will help get the job done through its abandoned plan program, which gives plan participants control over the fate of their own retirement savings.
When employers abandon their individual account pension plans, custodians such as banks, insurers and mutual fund companies are left holding the assets of these abandoned plans but without the authority to terminate such plans and make benefit distributions — even in response to participant demands.
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EBSA developed the abandoned plan program to facilitate a "voluntary, safe and efficient process" for winding up the affairs of abandoned individual account plans so that benefit distributions are made to participants and beneficiaries.
According to papers filed with the DOL, Emergent Business Services LLC, among others, abandoned its defined contribution pension plan in 2006, and plan participants found themselves unable to access the benefits they had earned. The alliance between JP Morgan and ADP now means the participants in this and other plans will soon have control over the fate of their retirement savings.
JP Morgan, the plan's asset custodian, elected to serve as the "qualified termination administrator" under the program and chose ADP, the plan's record keeper, to carry out the activities necessary to terminate and wind up the plan.
In addition to the Emergent Business Services plan, JP Morgan and ADP have elected to terminate and wind up approximately 180 other abandoned plans under the program, affecting about 690 plan participants and beneficiaries and involving almost $3 million in assets.
A pension plan generally is considered abandoned if 12 consecutive months pass in which no contributions to or distributions from the plan are made, and if a qualified termination administrator determines that the sponsor no longer exists, cannot be located or is otherwise unable to maintain the plan. To date, almost $75 million in distributions have been made under the program.
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