DOL’s ‘one-stop platform’ to help administer abandoned 401(k) plans goes live
The Employee Benefits Security Administration’s Abandoned Plan Program launches its online portal to assist in winding up individual account pension plans that have been abandoned by bankrupt companies.
In May, the Department of Labor announced its Employee Benefit Security Administration’s Abandoned Plan Program, which offers guidance on distributing assets from bankrupt companies, and now the online portal is up and running to assist administrators in distributing assets.
The DOL has launched its Abandoned Plan Program online system to help qualified termination administrators more efficiently submit information required by the department’s new Abandoned Plan Program.
The program, originally adopted in 2006, was amended by the DOL so trustees can distribute assets from bankrupt companies’ retirement plans to workers and retirees, effective July 16, 2024.
Since 2006, the program has enabled benefit distributions to be made to participants and beneficiaries of individual account retirement plans, such as 401(k) plans, that have been abandoned by their sponsoring companies. It allows qualified termination administrators to wind up a plan’s affairs and provides them with streamlined procedures for distributing benefits.
The new online filing system offers these administrators an online option for submitting required information to the department in addition to existing email and paper-based methods.
“The online system now offers a user-friendly, one-stop platform that qualified termination administrators can use to submit information needed by our Abandoned Plan Program,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “This new tool will facilitate plan terminations and benefit distributions to the hard-working people owed these funds.”
Recent updates to the Abandoned Plan Program will allow Chapter 7 bankruptcy trustees and their eligible designees to serve as qualified termination administrators. The existing associated prohibited transaction class exemption, PTE 2006-06, has been amended to permit Chapter 7 trustees and their designees to select and pay themselves for services in connection with terminating and winding up bankrupt companies’ retirement plans.
Related: New DOL guidance on ‘abandoned’ 401(k)s improves retirement plan payouts
“The online filing system will make it significantly easier to participate in the program and helps ensure that retirement plans accomplish their core mission of paying benefits to their participants and beneficiaries,” Gomez said.