DOL Proposes Amendments To Abandoned Plan Program

The Department of Labor's Employee Benefits Security Administration (EBSA) is proposing to allow bankruptcy trustees to take advantage of the agency's Abandoned Plan Program regulations under ERISA to terminate, wind up, and distribute retirement plan benefits to former employees of bankrupt companies. The Abandoned Plan Program in its current form establishes guidelines on when individual account plans, including 401(k)s, can be considered "abandoned" by their sponsoring employers; sets forth streamlined benefit termination and distribution procedures; and limits potential fiduciary liability of financial institutes that ultimately wind up and terminate the abandoned plans. The proposed rule would amend this program by making the process available to Chapter 7 bankruptcy trustees, who often have responsibility for administering abandoned plans. In conjunction with the proposed rule, the EBSA is seeking to amend the related class exemption  to permit bankruptcy trustees